BOUGHT WITH THE INCOME
FROM THE
SAGE ENDOWMENT FUND
THE GIFT OF
1891
-B-.-Bt-^-'S-B.-s: L'hf7./.G..f.a.^..
3 1924 032 536 488
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THE FIRST NINE YEARS OF THE
BANK OF ENGLAND
THOROLD ROGERS
II
Sontion
HENRY FROWDE
MACMILLAN AND CO.
THE FIRST NINE YEARS
OF
THE BANK OF ENGLAND
AN ENQUIRY INTO A WEEKLY EECORD OF THE PRICE
OF BANK STOCK FROM AUGUST 17, 1694
TO SEPTEMBER 17, 1703
JAMES E. THOEOLD BOGEES
• MERSES PROFVNLO ! PULCHRIOX EVENIT .'
AT THE CLARENDON PRESS
i^to §oxk
MACMILLAN AND CO., 112 FOURTH AVENUE
1887
{_AU rights reserved']
PREFACE.
Among the materials which I have collected for
the fifth and sixth volumes of my History of
Agriculture and Prices, is a weekly register of the
price of Bank of England stock, from August 17,
1694, to September 17, 1703. The entries or quota-
tions are taken from a statistical paper published by
John Houghton, an apothecary who first lived near
the Eoyal Exchange, and next in Gracechurch Street.
Houghton's paper contains a short article on some
matter of public interest in art or science or trade,
a price Hst of corn and some other commodities, from
many English market towns, and a number of adver-
tisements. The sheet is continued till the date given
above, when the proprietor of the paper informs his
subscribers that his business has so increased that it is
no longer in his power to afford the time necessary in
order to enable him to digest the materials for his
weekly publication. Houghton was the friend of
many eminent persons in his day, notably of Halley
the astronomer and physicist. He must have had
a reputation of his own, for he was long a Fellow of
vi Preface.
the Eoyal Society, as well as a very active man of
business. He is probably the person referred to in
Bishop Sprat's account of the Eoyal Society as the
tradesman whom the Society had elected, and for
whose presence they thought fit to apologise to
the King. Charles answered that he wished them
to elect many such persons, if they were equally
competent.
It is probable that not half a dozen perfect copies
of this remarkable work survive. Houghton's price
lists had only an ephemeral interest. His weekly
essays were indeed valued, and were reprinted long
after his death, the editor of this part of the col-
lections commenting on the excessive rarity of the
sheets from which they were extracted. The Bodleian
Library fortunately possesses a clean and perfect
copy. It is contained in the great collection of
newspapers given by the late Mr. Hope to the
University. I make no doubt that the British
Museum also possesses a copy, for I have seen
allusions to Houghton's paper in a work called
a History of Advertising.
As some of the expressions used to designate the
quotations of Bank stock were obscure, I enquired of
my friend Mr. Henry Grenfell, one of the Directors
of the Bank of England, whether I could get an
authoritative explanation in that institution. But I
found, on calling by his invitation at the Secretary's
ofl&ce in the Bank, that the Bank had no knowledge
Preface. vii
of the price of its stock before 1 705, and I inferred
that I had made a singular and curious discovery in
Houghton. I determined therefore that the register
should be published with a comment on it, because
it supplies a blank in the history of the Bank of
England, and indeed of the country, and this during
the time that this great institution, and very much
besides, were struggling for their very existence.
This was especially the case through the critical years
1695,1 696 and 1 697. I felt that, if I could adequately
comment on the facts, I should make no slight con-
tribution to economical and financial history, and
should besides throw some light on the political
events which occurred during the last eight years
of William the Third's reign, and the first year and
a-half of Anne's.
The most necessary materials for illustrating the
facts are the Journals of the two Houses and the
Statute-book for the period.
The project of a public bank long preceded its
adoption by Parliament as a protected corporation.
Thus, for instance, in the beginning of the year 1658
John Lambe, a London merchant, drew up the scheme
of a bank which he submitted to Oliver, then Lord
Protector. But the confusion which followed on
Cromwell's death in the same year prevented any
steps being taken with the project, if indeed it was
seriously entertained. Then, towards the latter end
of Charles's reign, the importance of establishing a
viii Preface.
bank in London, with branches in the largest towns,
was seriously discussed. Some writers suggested
that the bank should be under the management of
the corporation of the City, who should certify to its
credit, in imitation of the Bank of Amsterdam.
Others would have grafted it on one or the other of
the Companies which were then in existence and were
carrying on domestic manufactures and trade, just
as, long after this time, one of the Scotch banks was
based on a manufacturing company, and still bears
the name of the British Linen Company.
All persons indeed who were engaged in business
were alive to the possibility of circulating credit.
They had become familiar, in the City at least, with
such expedients by the circulation of goldsmiths' notes.
The difficulty was to find a security strong enough
to be trusted, and strong enough to be safe. Now
the goldsmith did not always satisfy the first con-
dition, for we are told that London merchants and
others had lost from two to three millions^ through
the bankruptcy of goldsmiths, and the experiences
which had been endured in consequence of the action
of the Grovernment must have made it manifest that
nothing but a really popular Government could give
adequate security to paper credit. Objectors were
not far wrong who said that a bank was incon-
sistent with monarchy, if by that they meant an
absolute one.
^ A Short Account of the Bank of England, 1695.
Preface. Ix
But even more important than these notices is Nar-
cissus Luttrell's Diary, a work preserved in All Souls
College Library. This collection was first used by
Macaulay for his History. It contains all the current
information which the writer could pick Up and
chronicle, between 1678 and 1714. The work was
printed by the Oxford University Press at Macaulay's
instance, and is simply invaluable for English history
and English opinion during the time which it covers.
LuttreU. appears to have been a moderate Whig ;
but there is little direct political bias discoverable in
his diary. He frequently gives the price of Bank
stock, and I have incorporated his figures in the
text below. Many of these prices, I have reason to
believe, are time bargains, and not bona fide sales and
transfers of stock, as I believe Houghton's are.
Houghton's collections contain not only the price
of Bank stock, but those of many other funds, or
actions as they were then called. Of these the most
interesting are the prices of stock in the two East
India Companies, the African Company, and the
Hudson's Bay Company, and I have taken occasion
from time to time to compare the fluctuations of
East India Company's stock with that of the Bank.
Houghton gives also the rate of exchange, especially
with Amsterdam, then the centre of European finance.
I have been able to interpret this rate, essential in
order to comprehend the troubles of the Bank, in
the three important years referred to, from the rare
X Preface.
and valuable work of Justice (1707) on the foreign
exchanges. I have procured, also from Houghton's
pages, the five Advertisements of Chamberlain's Land
Bank, a project which, concurrentlj with other
causes, gave that great shock to credit in 1696-7
which nearly destroyed the Bank, and all credit
with it.
The next source of contemporaneous information
is to be found in the pamphlets of the time. These
pamphlets are to the age in which they were
written what articles and essays in financial papers
are at the present time, except perhaps that they
were more carefully composed, because they had
to discuss very disputable subjects in very critical
times, and were frequently quoted years after they
were written. I think I may say, that they entirely
exhaust the contemporary aspect of the subject.
They are generally anonymous, but the authorship
of some has been revealed. Most are in the in-
terest of the Bank of England, though some of
them contain sharp but friendly criticisms on its
action. At the same time there are two or three
others which advocate the cause of the Land Bank.
One of these is I think written by Foley, some
time Speaker of the House of Commons, who with
Harley, long time Speaker, and afterwards Earl of
Oxford, was a patron of Chamberlain's absurdities.
A few are written by foes of the new institution.
In dealing with political events, which at an early
Preface. xi
date affected Bank stock, especially after the Peace
of Eyswick, I have mainly and continuously relied
on Sismondi's Histoire des Fran(;;ais, the best and
fairest History which as I think has ever been written.
I need hardly say, that during the long reign of
Louis XIV, or at least from the Restoration in 1660,
the history of France is the history of Europe.
But I have also taken into account the history of
Holland, whose career, from the War of Independence
to the Treaty of Utrecht, is the most instructive, as
well as the most splendid in the whole annals of
modern Europe.
I have also for the period contained in this volume
gone over the same ground, and used nearly the same
authorities, which Macaulay traversed and consulted.
And here perhaps I may be allowed to bear my
testimony to the exceeding fairness and cautious
accuracy of this great historian. The picturesque
character of Macaulay's style has perhaps induced
some dull persons to think that he strove after mere
effect, and that after all his realities are unreal.
I can only say that I have found him scrupulously
just. In many cases he could with perfect historical
honesty have pourtrayed persons, who played a con-
spicuous part in the financial history of the time, in
far darker colours than he thought proper to employ.
After going through the particulars of this period, I
feel, even though the facts are nearly two centuries
old, almost as much loathing towards Sir Charles
xii Preface.
Duncombe, whose existence in London was a perpetual
conspiracy against the Bank of England and public
credit, as every right-minded person feels towards
Gates and Fuller. But Macaulay, who could have
shown him as he was, lets him off over-easily.
I think Macaulay over-rated the political genius of
William the Third, great as it was. I think he over-
rated the financial genius of Montague, great as it
was. I think he might have given greater credit to
those honest, God-fearing, patriotic men, who really
founded the Bank of England, watched over its
early troubles, relieved it, by the highest shrewdness
and fidelity, from the perils it incurred, and estab-
lished the reputation of British integrity. For in
point of fact, the history of the Bank of England
during its first years is in no slight degree the
history of the settlement of 1689, and of the new
departure which that great event makes in the politics
of the civilised world.
The principle which lies at the bottom of the
English Eevolution is, that while forms of govern-
ment may be retained without change and with
advantage, though King, Lords, and Commons, an
established Church, with toleration for other forms
of creed or discipline, and a constitution entirely
dependent on precedents for its continuity and its
authority, may be recognised as the essential and
invariable features in the new constitution, England
was the first of nations to insist that a totally new
Preface. xiii
spirit should reside in these old forms. It broke
with the doctrine of legitimacy and indefeasible
right. It insisted that the sovereign and the
administration should be of the religion of the
people, and repudiated the ancient dogma that the
subject should follow the religion of the sovereign.
It resolved to make the crown dependent on the
discretion of Parliament. The experiment was full of
hazard, for it had to risk a collision with sentiments
which we may now hope are obsolete, to affirm
principles which had been passionately disputed, to
deal with men who were half-hearted or obstinate, to
use men who were shifty and doubtful, and to listen
to men whose evidence was suspicious, and might be
false or suborned. Hence it was expedient that as
few changes as possible should be made in the
traditions and forms of the Constitution. The enemies
of the new model were neither few nor weak, its friends
were timorous, dubious, interested, intriguing, while
a false step might bring about a serious reaction and
a formidable political danger. It is not wonderful that
the first twenty or thirty years of Parliamentary
government were marked by grave errors and great
risks, and that public men did not see for near a
century and a-half what was the necessary develop-
ment of the EngHsh constitution.
Nor is it remarkable that this great financial
experiment, the Bank of England, should have
needed incessant watchfulness, and the continual
xiv Preface.
support of the Government it aided, in order to
maintain its credit and to baffle its enemies. Long
after it had got over the dangers of its earlier career,
its prudence and abstinence from doubtful ventures
were made the plea for severely criticising the ex-
tension or even the continuance of its privileges.
It had never engrossed trade, but it was credited
with the power and perhaps the purpose of doing so.
It had never claimed to supersede its old enemies,
the Lombard Street goldsmiths, afterwards the London
bankers, but it was charged with the intention. It
had been the main instrument in reducing the rate
of interest, and it was alleged that its beneficent
action merely concealed a sinister design, and that
when it had got all London business into its hands
it would become an universal and remorseless usurer.
Its dealings with Government had been under strict
Parliamentary control, and it was imputed to it that
it could and probably would make the administration
independent of the Constitution. It had never bought
an inch of land, even for carrying on its own busi-
ness, for it was the tenant of the Grocers' Company
till 1735) when it purchased the residence of its first
Governor, Sir John Houblon, and it was said to
have the design of engrossing aU the landed estate
of the country^.
' I have taken these arguments from a pamphlet of i^io,
entitled ' A Vindication and Advancement of our National Consti-
tution and Credit.'
Preface. xv
The political and financial history of the Bank of
England has not been written, nor has any attempt
been made to show how it has brought about that
peculiarity in the English currency, that in this
country the efficiency of money, in the technical sense
of the word, has been developed to an extent which
cannot be paralleled in any other civilised community.
Now this was undoubtedly effected by the agency of
the Bank of England, and by it alone. I am indeed
only concerned with its earliest years, and to them
my reader will find that the quotation which I have
taken for my title-page emphatically applies. I
think however, if I have made my story at all clear,
that I have pointed out how an interpretation of the
market price of stock in a great instrument of credit
may assist in solving the most difficult of aU econo-
mical problems, the relations of a subsidiary currency
to genuine industry and to genuine capital. Specu-
lative political economy has been a most dangerous
guide, nothing but inductive political economy is
to be trusted as an interpreter of facts. We are as
yet in the infancy of that phase of the science.
The Bank of England, during that part of its
career which I have striven to illustrate, undoubtedly
committed some exceedingly grave errors in its policy,
errors which the students of political economy and
finance, even though they have only got into the
elements of their science, can detect, errors which the
friendly and contemporaneous critics of the Bank's
xvi Preface.
action did not fail to recognise. The directors
habitually confounded, to use the language of one of
these critics, ' the credit of their stock with the
credit of their cash.' No one believed that the Bank
was insolvent in 1697 and 1700, but every one knew
that the Bank could not honour its bills and notes,
even to the amount of regular or current demand.
In the earlier of these years there were great apolo-
gies to be made for the Bank, as I shall show below.
There was every disposition to support it when a
malicious run was made on its funds. But the Bank
under ordinary circumstances ought to have provided
that those who came to it, with genuine trade pur-
poses, for cash, should have the cash they needed.
Now those of my readers who care to examine the
Appendix which will be found below of the course of
exchange with Amsterdam, during the years 1698,
1699, and 1700, may with reason infer that the Bank
did not sufficiently strive after strengthening its cash
credit.
The privileges granted to the Bank of Eng-
land in 1697 (its first two and a-half years may be
treated as entirely experimental, though the experi-
ment was a fearful strain) were to be justified on
three grounds. The first, and that happily the most
transient, was the assistance it might render the
Government in times of peculiar pressure. In our
days, the good faith of the British Government is
absolute. "Without giving a forced value to its public
Preface. xvii
funds, as is done by the United States \ it has, by-
unflinching integrity in times of the greatest trial,
and under plausible temptations, as for instance at
the resumption of cash payments, kept the highest
credit, because it has acted consistently with good
faith. But that good faith which has become habitual
in the public affairs of the United Kingdom was then
an unknown quantity. Governments before the Ee-
volution had, it has been justly said, created obliga-
tions in plenty, the Government of the Eevohition
was the first to honour its obligations. The solvency
of the Bank was therefore based on the integrity of
the Government, and the vigour of the Government
was conditioned by the support of the Bank, for the
Government soon learnt that its power in the councils
of Europe depended on the punctual fulfilment of
its financial pledges.
The next justification for the Bank's privileges,
those I mean which it possessed for a century and a-
half after its foundation, was the assistance it gave
to currency and credit. It might be expedient to
supplement current cash with convertible notes, and
at a crisis, even with notes which were not instantly
convertible, to circulate during the time in which
the crisis was sharp. A generation and a-half ago,
such a power, lodged in the hands of reputable and
responsible people, was I am certain a financial
necessity, a condition for the continuity of genuine
' I am referring to the Banking laws of the American Union.
b
xviii Preface.
manufacture and trade, as I have been often told by
men who lived through times of solid business but a
straitened currency. But it was the duty of the
Bank to retire all paper which was not wanted for
special purposes, as soon as the special purpose had
ceased to be a matter of public concern. Now what-
ever apologies may be made for the Bank in
December 1696, and I think I have admitted them
to the full in the pages which follow, it was in the
last degree hazardous for it to put into circulation
nearly 1 1 million of notes, to have a reserve of less
than £36,000 in cash, and to have invested nearly
the whole of its funds in Government securities,
the liquidation of which was deferred, and owing to
the state of affairs at least precarious as to time.
I cannot but think that the Bank would have at-
tained its object, that of keeping the Government
account and fulfilling all the functions of the Ex-
chequer, if it had been more prudent in its earlier
years, and had kept a stronger cash balance.
The third justification of the Bank's privileges
was the effect which a wise and well-ordered institu-
tion would have on the foreign exchanges. Before
the foundation of the Bank, complaints were general
as to the exorbitant terms on which foreign bills
were discounted. The advocates of the Bank in its
early days, and again when its first troubles were
over, pointed with exultation to the way in which
the trade of the country had been freed from the
Preface. xix
harpies of Lombard Street, who exacted the terms of
Shylock from those who dealt with them. But here
again, though the Bank may have transferred the
charge from its customers to itself, by undertaking
to discount foreign bills at reasonable rates, it cer-
tainly injured its own credit by the insufficient basis
of cash on which it traded. Here also, as its
friendly critic alleges, the Bank ' confounded the
credit of its stock with the credit of its cash,' and
this not at a crisis like that of 1696 and 1697, ^^^
when the country was at peace, and the Bank was
beginning to make very large dividends.
There are few periods of English history which
are more interesting than the reign of William III.
I shall think myself fortunate if I have been able to
describe and expound one aspect of that instructive
epoch,
I have necessarily illustrated my sketch of the
Bank's early history by certain statistical tables.
They are five in number. The first, following this
Preface, is Houghton's weekly register of the price
of Bank stock. This is continuous, but in some
weeks there is no price, as Houghton expressly
states. It was this entry which led me to conclude
that my informant's register is of actual purchases,
for I cannot imagine that during these weeks there
were no time bargains, a mode of speculation which
Houghton is perfectly familiar with, and indeed
describes minutely. The second table, put with the
b2
XX Preface.
rest in the Appendix, is of the Amsterdam ex-
changes from 1695 onwards. In this table only
the variations are given. Thus from February i
to March i, 1695, ^^^ exchange on Amsterdam was
3 2 '6. The third table is Justice's interpretation of
these rates. The fourth is the discount on Bank
of England notes, taken from Houghton. The fifth
is the price of gold by the ounce, of silver by the
ounce, and of guineas, during the crisis, from the
same compiler.
JAMES E. THOROLD EOGERS.
OxroKD: February, 1887.
CONTENTS.
CHAPTER I.
Thk Geeat Expbeimbnt.
PAGE
Parliamentary Foundation of the Bank. Its Charter.
Capital of the Bank. Its first Governing Body. It
begins business. Its first place of business. Stock-
jobbing a fashion. Origin of the Goldsmiths' Banks.
English Banking. The Continental Banks. Their system
of Banking. The enemies of the Bank. Jealousy of
the Bank. The hostility of the Tories. The political
situation. Stock-jobbing. Ignorance of the principles
of Banking prevalent. Attachment of Londoners to the
City. The Bank and its profits. Godfrey's account of
the Bank of England. Principles on which the Bank
was founded. Prices of Bank Stock in 1694. Prices of
Stock in 1 69s. The Directors at Namur. The English
currency. The crime of clipping. New penalties. The
Act ineifectual. The price of gold and silver in 1695.
The foreign exchanges. The exchange with Amsterdam.
Discounts of English bills. The recoinage. The policy
of Montague and Sommers. Criticism on the Recoinage
Act. The details of the Act . . . . . .1-49
CHAPTER II.
The Land Bank.
Chamberlain and his supporters. Chamberlain's Advertise-
ments. The National Land Bank Act. Total failure
of the project. The effects of Chamberlain's project.
Efforts to keep the Land Bank going. The new coinage.
Reaction. The first Exchequer Bills. The defence of
the Land Bank. Some trouble caused by the Bank's
action. A proprietor's criticism of the situation in
which the Bank was placed, The assets of the Bank.
The causes of the crisis. Joint-stock rivalry illustrated
by the East India Companies. The discount of Bank
bills 50-88
CHAPTER III.
The Second Bank Act.
Provisions of. the second Act. The incident of Duncombe
and the Exchequer Bills. The price of stock in 1 6g8. Re-
payment of the loan capital of 1697. Bank stock in the
xxii Contents.
PAGE
year 1699. The character of London merchants. Their
eagerness for City honours. The affair of the Spanish
Ambassador. Bank stock in 1700. Commercial pro-
sperity. Influence of foreign politics on stock. Dun-
combe's reputed projects. Death of the King of Spain.
Movements in Europe. War distasteful. The state of
the Finances. Excise and Customs. The income tax
and official gains. Public opinion on the situation.
Views of the moneyed men. The Parliament of i^oi.
Quarrels between the Lords and the Commons. Public
opinion in Kent, &c. The meeting of Parliament. The
letter of Melfort. The action of the Commons. The
view taken by the Lords. The cause of the French
King's action. The impeachment of the four Lords. The
Kentish petition. The punishment of the Petitioners.
The Legion letter. The discredit in which William was.
The acknowledgement of the Pretender. The dissolution
and elections of 1701. Price of Bank stock. A run on
the Bank. Criticism on the Bank's action. Vote of
April 10, 1701. The good fortune of the Bank. Keturn
of William. The political situation. The New Parlia-
ment and Colepepper. The King's death and its cause.
The wars with France. France at the Eevolution and its
foreign policy. Its domestic policy. Holland and England
the only formidable enemies of Louis XIV. William's posi-
tion. General freedom from corruption. The Occasional
Conformity Bill. Bank stock in 1702. Rumours in
1702. Eenewal of the War. The success of the allies.
The new Parliament. Bank stock in 1703. The pro-
gress of trade. Price of East Indian stocks. The war
in 1703. The position of the Bank. The change of
1844 . 89-164
TABLES.
Table I. Weekly prices of Bank Stock, Aug. 17, 1694, to
Sept. 17, 1703 xxiii
,, II. Rates of Exchange on Amsterdam . . .165
„ III. Discount or Premium on Bills of Exchange,
London and Amsterdam . . . .169
,, IV. Discount of Bank Bills 170
„ V. Changes in the value of gold, silver, and guineas . 171
List op Authoeities tjsed ..... xxviii
The First Diebctobs xxx
TABLE I.
WEEKLY PRICES OF BANK STOCK,
Aug. 17, 1694, to Sept. 17, 1703.
The blanks mean that no price was quoted or no transactions done.
1694.
Aug.17 102
Aug. 24 102
Aug. 31 loi
Sept. 7 100
Sept. 14 100
Sept.2i 100
Sept.28 lOI
Oct. 5 loi
Oct. 12 103
Oct. 19 103
Oct. 26 103
Nov. 2 57'
Nov. 9 61
Nov. 16 51
Nov. 23 60
Nov. 30 7°
Dec. 7 72
Dec. 14 72
Dec. 21 76
Dec. 28 75
1695.
Jan. 4 74
Jan. II 77
Jan. 18 81
Jan. 25 90
Feb. I 89
Feb. 8 90
Feb. 15 89
1 'The money paid in,
by the subscribers.
Feb. 22
Mar. I
Mar. 8
Mar. 15
Mar. 22
Mar. 29
Apr. 5
Apr. 12
Apr. 19
Apr. 26
May 3
May 10
May 17
May 24
May 31
June 7
June 14
June 21
June 28
July 5
July 12
July 19
July 26
Aug. 2
Aug. 9
Aug. 16
Aug. 23
Aug. 30
Sept. 6
Sept. 13
Sept. 20
It appears that
92
89
79
95
99
92
90
92
92
91
91
91
92
91
92
92
93
97
99
96
97
97
95
97
96
94
95
95
98
97
97
Sept.
Oct.
Oct.
Oct.
Oct.
Nov.
Nov.
Nov.
Nov.
Nov.
Dec.
Dec.
Dec.
Dec.
o
I
8
15
22
29
6
13 100
20 TOO
27 100
98
93
94
95
95
95
94
94
94
94
97
1696.
Jan.
Jan.
Jan.
Jan.
Jan.
Feb.
Feb.
Feb.
Feb.
Mar.
Mar.
Mar.
Mar.
Apr.
3
10
17
24
31
7
14
21
28
6
13
20
27
3
102
108
107
107
107
93
83
84
88
86
84
82
84
^ 87
y
this means the actual sum paid
XXIV
Weekly Prices of Bank Stock.
Apr. 10 85
Apr. 17 86
Apr. 25 84
May 2 84
May 8 83
May 15 80
May 22 79
May 29 78
June 5 78
June 12 78
June 19 78
June 26 79
July 3 79
July 10 78
July IT 73
July 24 75
July 31 73
Aug. 7 71
Aug. 14 70
Aug. 21 69
Aug. 28 69
Sept. 4 69
Sept. II 69
Sept. 18 71
Sept. 25 70
Oct. 2 68
Oct. 9 60
Oct. 16 60
Oct. 23 61
Oct. 30 , 61
Nov. 6 64
Nov. 13 86
Nov. 20 80
Nov. 27 81
Dec. 4 77
Dec. II 73
Dec. 18 73
Dec. 25 73
' This distinction,
money and (2) notes,
' ' No price.'
1697.
Jan. I
Jan. 8
Jan. 15
72
n
66
'Monet. Bakk.
Jan. 22 ..
Jan. 29 ..
Feb. 5 ..
Feb. 12 ..
Feb. 19 ..
Feb. 26 ..
Mar. 5 ..
Mar. 12 ..
Mar. 19 ..
Mar. 26 ..
Apr. 2 ..
Apr. 9 ..
Apr. 16 ..
Apr. 23 ..
Apr. 30 ..
May 7 ..
May 14 ..
May 21 ..
May 28 ..
June 4 ..
June II . .
June 18 ..
June 25 ..
July 2 ..
July 9 ..
July 16 ..
July 23 ..
July 30 ..
Aug. 6 ..
Aug. 13 ..
Aug. 20 ..
Aug. 27 ..
55
52*
51
51
55
54i
54i
53i
53}
54
54
54
55
56
56
56
56
56
56
61
60I
60I
6o|
6oi
6oi
60I
60^
60I
6oi
60I
60J
60I
65
63I
62I
62*
69
68
68
67
67
68
68
68
68
69
69
69
69
69
69
74
74
74
74
74
74
74
74
74
74
74
75
77
Sept. 3
Sept. 10
Sept. 1 7
Sept. 24
Oct. I
Oct. 8
Oct. 15
Oct. 2 2
Oct. 29
Nov. 5
Nov. 1 2
Nov. 19
Nov. 26
Dec. 3
Dec. 10
Dec. 17
Dec. 24
Dec. 31
continued to August 27, is the
On and after September 3 the
1698.
Jan. 7
Jan. 14
Jan. 21
Jan. 28
Feb. 4
Feb. II
Feb. 18
Feb. 25
Mar. 4
Mar. II
Mar. 18
Mar. 25
Apr. i^
Apr. 8
Apr. 15
Apr. 22
Apr. 29
price of the stock
price is money.
60-1
82
98
96
97*
95*
95*
93
91*
90
88*
89
86|
87f
90*
90*
89
86f
86
86*
87*
88*
86*
86*
86i
86i
87i
87
89i
91
in (I)
Weekly Prices of Bank Stock,
XXV
May 6 9^
May 13 91
May 20 91
May 27 91^^
June 3 92^
June 10 91 J
Junei7 91
June 24 91J
July I 92
July 8 94
July 15 9ii
July 22 94J
July 29 94|
Aug. 6 94^
Aug. 12 96^
Aug. 19 96!
Aug. 26 97J
Sept. 2 97 J
Sept. 9 97i
Sept. 16 —
Sept. 23 96|-
Sept.30 90
Oct. 7 <)o\
Oct. 14 93^^
Oct. 21 94t
Oct. 28 96!
Nov. 4 96I
Nov. II 96J
Nov. 18 97i
Nov. 25 98!
Dec. 2 .. ..
Dec. 9 102
Dec. 16 103
Dec. S3 103
Dec. 30 103
1699.
Jan. 6 103
Jan. 13 102J
Jan. 20 102^
Jan. 27 loif
Feb.
i04i
99f
Feb. 17 io3t
Feb. 24 104
Mar. 2 103!^,
Mar. 9 104^^
Mar. 16 —
Mar. 23 I05f
Mar. 30 103
Apr. 7 I02f
■Apr. 14 104
Apr. 21 104
Apr. 28 104
May 5 104
May 12 104
May 19 i04i
May 26 105
June 2 —
June 9 103!
June 16 io4t
June 23 io5i
June 30 I04f
July 7 i04f
July 14 105I
July 21 107
July 28 107
Aug. 4 .. .. ., 107
Aug. II io8f
Aug. 18 io8f
Aug. 25 109^
Sept. I iioj
Sept. 8 113
Sept. 15 113
Sept.22 119
Sept.29 ii7i
Oct. 6 117?
Oct. 13 1161
Oct. 20 ii6f
Oct. 27 ii6f
Nov. 3 ii6f.
Nov. 10 118
Nov. 17 ii7i
Nov. 24 117^
Dec. I 115
Dec. 8 115
Dec. 15 117I
Dec. 22 117^^
Dec. 29 —
1700,
Jan. 5 126
Jan. 12 126
Jan. 19 130
Jan. 26 i29f
Feb. 2 129!
Feb. 9 139J
Feb. 16 139J
Feb. 23 143
Mar. I 148 ,r
Mar. 8 145
Mar. 15 148J
Mar. 22 i48|-
Mar. 29 —
Apr. 5 —
Apr. 12 —
Apr. 19 —
Apr. 26 142
May 3 138!-
May 10 138^
May 17 139
May 24 139
May 31 141
June 7 i4ii
June 14 141T
June 21 .. : .. iS^i
June 28 139
July 5
139
XXVI
Weekly Prices of Bank Stock.
July 12 138!
July 19 137I
July 26 i36i
Aug. 2 136J
Aug. 9 141I
Aug. 16 140I
Aug. 23 138!
Aug. 30 142
Sept. 5 142
Sept. 13 —
Sept. 20 —
Sept. 27 133
Oct. 4 132I
Oct. II 130^
Oct. 18 129
Oct. 25 129
Nov. I 129
Nov- 8 129
Nov. 15 129
Nov. 22 129
Nov. 29 129
Dec. 6 129
Dec. 13 129
Dec. 20 129
Dec. 27 i24|-
1701.
Jan. 3 123
Jan. 10 123
Jan. 17 123
Jan. 24 123
Jan. 31 123
Feb. 7 123
Feb. 14 123
Feb. 21 123
Feb. 28 123
Mar. 7 123
Mar. 14 123
Mar. 21 123
Mar. 28 123
Apr. 4 123
Apr. II 103^
Apr. 18 107
Apr. 25 107
May 2 107
May 9 iiij
May 16 106
May 23 106
May 30 —
June 6 106
June 13 106
June 20 106
June 27 106
July 4 112^
July II no
July 18 1092
July 25 107
Aug. I 1105:
Aug. 8 loSi
Aug. 15 108J-
Aug. 22 112^
Aug. 29 115
Sept. 5 ii5i
Sept. 12 ii8|
Sept. 19 —
Sept. 26 —
Oct. 3 —
Oct. 10 109J
Oct. 17 i°9i
Oct. 24 108^
Oct. 31 io8|
Nov. 7 io8f
Nov. 14 io7i
Nov. 21 107I
Nov. 28 109I
Dec. 5 109!
Dec. 12 iio^
Dec. 19 iio|-
Dec. 26 iio^
1702.
Jan. 2
Jan. 9
Jan. 16
Jan. 23
Jan. 30
Feb. 6
Feb. 13
Feb. 20
Feb. 27
Mar. 6
Mar. 13
Mar. 20
Mar. 27
Apr. 3
Apr. 10
Apr. 17
Apr. 24
May I ,
May 8 .
May 15 .
May 22
May 29 .
June 5 ,
June 12 .
June 1 9 .
June 26 .
July 3 ■
July 10 ,
July 17 •
July 24 ,
July 31 .
Aug. 7 ,
Aug. 14 .
Aug. 2 1 .
Aug. 28 .
Sept. 4 ,
Sept. 1 1 .
Sept. 18 .
"4i
ii4i
ii3i
"3i
115
117
118
n8
117
ii7f
ii7i
"3i
ii3i-
ii4f
114I
ii4|-
114
ii5t
"Si
ii7i
118
118
121^
ii8f
ii8f
ii8i
iiSJ
ii8i
122
i2ii
I2l|^
I2l|-
I2li
i25i
Weekly Prices of Bank Stock. xxvii
Sept. 25 —
Oct. 2 120J
Oct. 9 120
Oct. 16 119
Oct. 23 120J
Oct. 30 120J
JN'ov. 6 1 2 if
Nov. 13 I2I-|
Nov. 21 123
Nov. 28 i26f
Dec. 4 127I
Dec. II 129
Dec. 18 128
Dec. 25 i28f
1703.
Jan. I 129
Jan. 8 129
Jan. 15 126
Jan. 22 126
Jan. 29 128|-
Feb. 5 1271
Feb. 12 i26f
Feb. 19 i27f
Feb. 26 i28|
Mar. 5 129
Mar. 12 129
Mar. 19 129
Mar. 26 —
Apr. 2 —
Apr. 9 125^
Apr. 16 1251^
Apr. 23 i27f
Apr. 30 128
May 7 127
May 14 127
May 21 —
May 28 i27f
June 4 I27f
June II 129I
June 18 I
29f
June 25 i3of
July 2 130^
July 9 i33i
July 16 133
Ju'y 23 i33i
July 3° 133I
Aug. 6 i33f
Aug. 13 1331-
Aug. 20 133I
Aug. 27 i37f
Sept. 3 i38f
Sept. 10 i38f
Sept. 17 138!
AUTHORITIES USED IN THE
FOLLOWING WORK.
Houghton. Collections for Husbandry and Trade. 2 vols. fol.
1691-1703.
LuTTKELL. A Brief Relation of State Affairs. 6 vols. 8 vo. Oxford
University Press.
Macatoat. History of England.
SiSMONDi. Histoire des Franfais.
Davjbs. History of Holland.
Macphbeson. Aniials of Gomimerce.
PosTLETHVfATT. History of the English Revenue.
Justice, Alexander. General Treatise on Money and Ex-
changes. 1707.
Locke. Further Considerations concerning raising the value of
Money. 1696.
Journals of tJie Lords and Commons. 1 694-1 703.
Parliamentary History. Vol. V.
Seasonable Observations humbly offered to his Highness tlie Lord
Protector. By Samuel Lambe, of London, Merchant.! Jan. 19,
1658.
Corporation Credit. A Bank of Credit made current by the
Common Council in London mare useful and safe than Money.
1682.
Bank Credit, or the Usefulness and Security of the Bank of Credit
examined. 1682.
An Account of the Constitution and Security of the General Bank
of Credit. 1683.
A Brief Account of the intended Bank of England. 1694.
* The Commission for taking subscriptions for £1,200,000 2>ur-
suant to Act of Parliament.
* A List of the Names of the Subscribers to the Bank of England.
* Rules, Orders, and Byelaws for the good government of tlie
Corporation and Company of the Bank of England.
* The above are undated, but they were of course published in 1694.
Artthorities. xxix
England^ a Glory, o/r the great improvement of trade in general by
a Boyal Bank. By H. M. June 23, 1694.
Some Observdtions on the Bank of England. 1695.
A Short Account of the Bank of England. 1695.
A Proposal for a National Bank. 1695. By Egbert Mtjbbay.
An Answer to a late pamphlet, entitled Reasons offered against
the intended project commonly called the Land Bank. By Jo^N
Beiscoe.
Remarks on the proceedings of the Commissioners for putting in
execution the Act passed last Session for establishing a Land Bank.
1696.
An Essay towards the settlement of National Credit. By John
Cary. Jan. 5, 1697.
A Letter to a Friend concerning the credit of the Nation and with
relation to the present Bank of England as now established by Act
0/ Parliament. Written by a Member of the said Corporation for
the public good of the Kingdom. 1697.
Arguments and Reasons for and against engrafting on the Bank
of England with Tallies, as they have been debated at a late
General Court of the said Bank. No date, but certainly 1697.
The Villainy of Stock-jobbers detected and the causes of the lale
run upon the Bank and Bankers discovered and considered. 1701.
Remarks on the Bank of England, with regard more especially
to Trade and Government. 1706.
Remarks on the Bank of England concerning the intended
2)rolongation of the Bank. 1 707.
Reasons against the prolongation of the Bank. I'jo'j.
A Vindication and Advancement of our National Constitution
and Credit. 1 7 1 o.
The Directors of the Bank of England enemies to the great
interests of the Kingdom. 1 7 1 1.
THE FIRST DIRECTORS.
Governor.
* Sir John Houblon. L. M. 1696. Died Jan. 10, 171 2.
Dejputy-Governor.
* Michael Godfket. Died July, 1695.
Birectors.
* SiE John Suband.
*SiE James Houblon. M.P. for City. Died Oct. 26, 1700.
*SiE Wm. Gore. L. M. 1702.
*SiK Wm. Scawen. M.P. for Wiijidsor. Died Jan. 20, 1708.
*SiB Henry Fuenesb. Knighted Oct. 1691.
* SiE Thomas Abney. L. M. i 70 i .
*SiE William Hedges. Died Aug. 1701.
*Beook Bridges.
* James Bateman. L. M. 17 17.
* George Doddington.
J Edward Clbekb. L. M. 1697.
J James DiInew.
* Thomas Goddaed. Died 1700.
*Abraham Houblon.
* GiLBEET HbATHCOTE. L. M. 1711.
* Theodoee Jansbn.
* John Loedell.
J Samuel Lethullieh. Died Feb. 1710.
J William Patbeson.
* Egbert Ra worth.
* John Smith.
+Obadiah Sedgwick.
J Nathaniel Tench.
*John Ward. L. M. 1719.
The First Directors. xxxi
A list of the subscribers to the Bank was published immediately
on the subscription being completed. In the contemporary printed
list, all marked with an asterisk (*) qualified to be Governor, i.e. had
subscribed £4000 and upwards. Those marked t qualified to act as
Deputy Governor. Those marked % as Directors only. Sixty-three
of the subscribers qualified as Governor, and among these were the
Duke of Leeds, the Duke of Devonshire, the Earl of Portland,
the Countess of Carlisle, Lord Godolphin, Lady Ann Mason, Sir
Stephen Fox, and Sir John Trenchard. Thirteen qualified for the
post of Deputy Governor, i.e. subscribed £3000 and uader £4000 ;
113 qualified as Directors only. Six hundred and thirty-three
were qualified to vote at the courts, i.e. held more than £500 and
under £1000. There are a great many women in the fourth
division. Montague qualified up to the place of Director.
Duncombe was not a subscriber. The subscriptions of Leeds and
Godolphin were probably in the name of the Queen, for Mary is
not in the list of subscribers. The total number of subscribers
was 1267, and the list is headed by the names of the King and
Queen, though with no subscription underwritten. The manuscript
subscription list is preserved among the archives of the Bank,
and the printed list was, without doubt, published under the
authority of the Directors.
THE
FIRST NINE YEARS OF THE
BANK OF ENGLAND.
CHAPTER I.
THE' GREAT EXPERIMENT.
The Act of legislation, wliich gave a Parliamentary i694.
foundation to the Bank of England and regulated p^^^^'^_
its powers, is a series of clauses in the Ways and ^l^^J^_
Means Bill of 1694, 5 William and Mary, cap. 20. The ^°"/'**
Act levies divers customs and excises, some moderate
enough, as we should think, on consumable articles,
some unwise enough, and seeks to raise a loan of
a million and a-half. To such subscribers of this
loan as provide in the aggregate ;^ 1,2 00,000,
the Act promises a charter and a title. The title
is. The Governor and Company of the Bank of
England. The Act, putting very severe restrictions
on the attitude which it was feared the Bank might
assume towards the Government, and especially to-
wards the Whigs, permitted the Company to deal
in bullion and bills, to issue notes, and to make
advances on merchandise. But the Bank was
disabled .from trading with its own securities ^
' The Bill had the assent of the Commons in a very thin house.
It is said that only forty-two members were present. 'A Short
Account of the Bank of England,' 1695.
r B
2 First Nine Years of the Bank of England, [i.
1694. The charter of the Bank was granted on July 24,
i^ 1694. The subscription of the capital had begun
ciaHeT. ^^ Thursday, June 2 1, in the Mercers' Chapel ; and, ac-
Capital of -.. mi • i il
the Bank, cording to Luttrell, the amount written down on the
first day was^300,ooo, the Queen subscribing^] 0,000.
To encourage capitalists, £2 los. per cent, rebate on
the amount subscribed was allowed on the first
three days, and £2 on the subscriptions of Monday,
June 25 ; after which the advantage was reduced by
five shillings per cent, for each of the successive
days^. More than ;^6oo,ooo was subscribed on the
first three days, a result which constituted the
subscribers a corporation, as it satisfied the conditions
under which the charter was to be issued. By
Tuesday night, June 26, ;i^900,ooo was subscribed ;
and by noon of Monday, July 2, the whole sub-
scription was completed ^-
its first On Tuesday, July 10, the subscribers chose Sir John
Q-overning '' •'
Body. Houblon to be the governor, and Michael Godfrey
to be the deputy governor ; and on Wednesday the
first twenty-four directors were elected. Among
them were Paterson, who was credited with having
devised the undertaking 3, but who soon disappears
from the management; and two other members of
' ' These premiums were defrayed from the Civil List.' Postle-
thwayt's History of the Revenue.
^ Godfrey says that the v^hole was subscribed ia ten days. The
signatures of the subscribers, or of their agents, and the amounts
which they underwrote, are preserved in the archives of the
Bank.
^ In 1695 Paterson was in Scotland, negotiating the Darien
scheme.
I.J The Great Experiment. 3
the Houblon family 1. Another was Sir Thomas Abney, 1694.
the leading Nonconformist of the city, the firm friend "
and patron of Dr. Watts. Grilbert Heathcote, whose
evidence before the Committee of the whole House
of Commons extinguished the monopoly which the
charter of the old East India Company gave them,
and as Macaulay says, established the principle, that
' no power but that of the whole legislature can give
to any person or to any society an exclusive privilege
of trading in any part of the world,' was another
director. The rest were men of mercantile renown,
and we are informed that all belonged to the Whig
party. By the Act of Parliament, the privileges
of a Bank were secured to them for twelve years,
provision being made that the Government might,
in 1705, pay up the loan and extinguish the charter
by giving a year's notice to the Company. On this
loan Parliament agreed to pay 8 per cent, interest.
On August I, according to Luttrell, ' the new bank it begins
paid into the Exchequer £112,000, which they did
by their Bank Bills, sealed with the seal of their
corporation, being the Britannia sitting on a bank of
money 2,' from which we may infer that the instal-
' James Houblon, the father of the governor and the two
directors, was descended from a Flemish refugee, who had escaped
from the persecution of Alva. He was born on July 2, 1592,
and died June 20, 1682. He was buried in St. Mary Wolnoth
church, June 28, and his funeral sermon was preached by Burnet.
He had become wealthy, but remained a member and office-holder
of the French congregation. Seven sons survived him, Peter,
James, John, Jacob, Isaac, Abraham, Jeremiah, and sixty grand-
children and great-grandchildren.
" This is the original seal of the Bank, and is copied on the
B 2
4 First Nine Years of the Bank of England. [I.
_1694. merits to the Exchequer were paid gradually and
in part at least in paper. Indeed the same authority-
tells us that on August 7 tallies were struck at the
Exchequer for a million sterling, in order to pay
the army, such tallies at the time answering some
of the ends of Exchequer Bills. On August 1 6 fif-
teen persons were chosen to draw up byelaws for
the Bank, lawyers and merchants, among the former
being Sir Bartholomew Shower, who had escaped
punishment for his doings in the time of the last
two Stuart kings only by William's own Act of In-
demnity. On August 17 I find the first quotation
of Bank Stock. It is £102.
Its first I have thought it well to give a brief statement
place of 00
business, of the proccss by which the Bank was constituted.
It held, according to Luttrell, its first sittings in the
Mercers' Chapel, and continued there till September
28, when Sir John Houblon, the governor, informed
the shareholders at a general court, held in the chapel,
that they must needs remove out of the present
quarters, and that he had taken Grocers' Hall for
eleven years. Here they remained for forty years.
He also told the shareholders that the byelaws
had been framed and laid before Serjeant Levinz
(a lawyer whom I know from contemporary records
to have been retained in nearly aU important cases),
and that the Bank was in a flourishing condition.
On September 28 ^ the Stock was quoted at loi.
earlier notes. In later times the ' bank of money ' was turned into
a beehive, and its position changed also from left to right.
^ My dates, taken from contemporary accounts, are of course
' old style.'
I.] The Great Experiment. 5
During the first few years after the Revolution 1694.
company-forming and stock-jobbing were rapidly gtoch-
developed, and just about the time that the Bankj?*^^^''
was founded the passion for speculation was pecu-
liarly active. Houghton, the chronicler of commerce
and trade during the reign of William, gives in
the early part of the year 1694 ^ series of papers
in which he instructs his readers in the mysteries of
stock-jobbing and time-bargains. Among Montague's
financial expedients was the million lottery, the
fortunate drawers in these lotteries being entitled
to life annuities. The subscription was filled up
before the end of May, and the tickets soon rose
to a premium. The drawings did not take place
till October 8, and Luttrell notes that the largest
prize, that of £1000 a year, fell to four French
Huguenots who had left their country and forfeited
their estates for their religion.
There were private lotteries in plenty. There
were joint-stock companies for mining, for trading,
and for manufactures, some created by patent, some
by charter. Those which were in existence were
threatened with rivals, for projectors abounded.
Some of these companies survive, many have long
since been defunct and forgotten.
Old-fashioned people still kept their savings in OHgin of
strong boxes in their own homes. Pope's father did, smUUs'
years after the foundation of the Bank of England.
But most of those who saved looked out for a safe
place of deposit. In the time of Charles I the Mint
was the place, and the king ' borrowed ' £200,000
6 First Nine Years of the Bank of England, [i.
1694. of these deposits in 16381. Undeterred by this ex-
"'"^^ perience, the goldsmiths, after the Kestoration, de-
posited £1,328,526 in the Exchequer. They had
lent it at 8 per cent., the money being entrusted
to them by their customers. The king shut up the
Exchequer in 1672, and appropriated its contents.
The half of this sum was acknowledged by Parlia-
ment as a national obligation, and it forms, in origin
at least, the oldest part of the public debt, though it
was not formally recognised till 1701 (12 WilL
III. cap. 12).
EiujUsh The goldsmiths of the Eevolution became the
Banking. n i ■ t i m
private bankers of the eighteenth century, ihey
were, at its inception, the foes of the Bank, and, as
is well known, brought it into serious straits by
their intrigues in the early years of its existence.
They had been attacked or criticised when their
custom of giving bills on deposits had become fa-
miliar, for the earliest system of English banking
treated the goldsmith's bill, as long as it was not
presented, as the equivalent of the money deposited
on it, and thus allowed the banker to make use
of so much of his customers' balances as experience
taught him was not necessary for the calls that were
made on him from day to day. It was this practice,
avowed and recognised, which distinguished the
theory and habit of banking in England from its earlier
types in foreign countries. But the goldsmiths, if
they made large profits, had suffered great wrongs.
■ Charles, unlike his son, paid the money back, but the Mint
never regained its reputation.
I.] The Great Experiment. 7
There were at this time at least three great banks 1694.
in Europe, those of Venice, Genoa, and Amsterdam. Th^^Conti-
Of these, that of Venice was the most ancient. It »^'*'°''
is said to date from a transaction as far back as
1 1 71. The Bank of Genoa was founded in 1407.
The Bank of Amsterdam was established in 1609.
All these had a considerable history. The Bank of
Venice was a great instrument of commerce and
government through the middle ages. That of
Genoa was a republic within a republic. It founded
an empire, as our East India Company did, on
a small scale ^, and was still in repute. But there
had been nothing like the Bank of Amsterdam.
Founded to be sure when the republic was just on
the point of concluding its first truce with the
Spanish king, it had weathered many a storm after
the early days of its being. Even in the days of
Adam Smith, when the Bank of England had been in
existence for more than eighty years, and had been
the financial agent of the Government during the
greater part of the time, that great economist was
more interested in the constitution and action of
the Bank of Amsterdam than he was in the similar
institution of his own country. He procured a
special report of this Bank from the pen of his
friend Mr. Hope, and inserted it as a valuable
digression in his Wealth of Nations^.
^to'
^ The Bank of Genoa, among its other possessions, had the Island
of Corsica, which it sold to the French a little before, or as some
have said after, the birth of Buonaparte.
' Wealth of Nations, book iv. chap. 3.
8 First Nine Years of the Bank of England. [l.
1694. These banks differed fundamentally in their con-
Th^ stitution from that of the Bank of England. They
system of -^ej-g in their early days what they professed to
be throughout their career, banks of deposit, in
which the coins of all countries were taken from
merchants, assayed or valued, and held as the equi-
valent of the bills issued against them. In theory
the notes of these earlier banks were of the nature
of dock warrants, entitling the holder to claim not
only the sum which they expressed, but, theoretically
at least, the very coins which were deposited against
them. Hence the paper which they issued bore a pre-
mium, from which the first profit of the bank was
derived ^ It was alleged by Davenant, an author
writing at the time when the Bank of England was
founded, that the Amsterdam Bank held regularly
£36,000,000 sterling. In 1672, when Charles and
Louis, in pursuance of their secret treaty, made
sudden war on the Dutch, and the populace mur-
dered the De Witts, and there was a run on the
Bank, its treasure was found to be intact, the
marks on the pieces which had been scorched in the
Stadthaus fire long before being still plainly visible.
But when Holland was overrun by the French in
the early years of the great continental war, the
whole of the treasure was gone. It had been lent,
in defiance of the fundamental law of the Bank's
constitution, to the Dutch East India Company.
^ The State also enacted that all bills beyond a certain amount
should be negotiated at the Bank. Hence every considerable
merchant had to keep an account there.
I.] The Great Experiment. g
The Bank of Englknd from its very beginning 1694.
went on a different course, that which the London "
goldsmiths had already practised. It purported to give
in its bills the equivalent of what it had received,
but it never pretended to take the deposit for any
other purpose than that of trading with it. It never
professed to make its issues square exactly with its
coin and bullion, though of course it made its liabilities
square with its assets, plus the capital of its share-
holders, and in time, plus its rest or reserve also, i.e.
its accumulated and undivided profits. At first these
profits were derived from the dividends it received
from Government, and from the gains it made out of
the notes which it put into circulation, in exchange
for, or in addition to, the cash which it took. It
coined, in short, its own credit into paper money.
When the project was adopted by Montague, and The
T)i • !•! enemies of
the scheme of the new Bank was inserted m the the Sank.
Tonnage Act, it was assailed by three different classes
of persons with varied motives but with concurrent
bitterness. It was attacked by the old money-lenders
and bankers, by the dissentient Whigs and all the
Tories, and by the projectors of rival schemes. The
rancour of these people survived the grant of the
charter and the unquestionable services which the
Bank did, and the first great peril which the Bank
ran was from a rival projector, who had propounded
his scheme at least simultaneously with that of
Paterson and Godfrey, if not antecedently to it.
It was alleged that the Tonnage Bank, as it was
nicknamed, would absorb all the money of the
lo First Nine Years of the Bank of England. [I.
1694. country, and subject all trade to usurious exactions.
They who had been making twenty or thirty per cent,
on trade loans, affected to be alarmed at the risk
which honest merchants would run if they got into
the clutches of this harpy of Grocers' Hall. The pro-
moters of the Bank, Godfrey and Paterson, put out
pamphlets to prove that the action of the Bank would
infallibly tend to lower rates of discount and interest,
because it would utilise to the utmost both capital
and credit. The morbid and bitter jealousy which
private institutions of credit feel towards those
modern forms of business in which publicity is
courted has survived to our own time, and expedients
for aiding a small note circulation and a system of
deposit in public institutions for the benefit of the
poorer classes have been angrily criticised and stu-
diously hampered. The private bankers of the
eighteenth century strove to ruin the reputation of
their hated rival by plotting against its credit.
Macaulay (chap, xxii.) has described one of the
earliest of these conspiracies, which was baffled within
two years of the Company's commencing business.
Jealousy of The disseutient Whigs and the Tories were united in
the Bank. . .
distrusting Montague's scheme. The former affected
to believe that the Bank might neutralise that con-
trol over the public purse, and thereby over the policy
of the Sovereign, which it was the glory of the Revo-
lution to have established. They affected to dread that
the Whig merchants of the City would undermine the
Constitution, would risk their own money prodigally,
and further expedients which would make them
I.] The Great Experiment. 1 1
certain to lose it. So a clause was inserted in the 1694.
Bill, under which the Bank was disabled from lending "
to the Government, except with the consent of Par-
liament. The promoters of the undertaking must
have thanked them for the protection which their
jealous zeal accorded to the infant corporation. The
rule was violated wholesale by the younger Pitt, and
the Bank suffered one of the greatest risks of its
existence in February, 1797.
The dislike of the Tories to the new measure was The hosui-
of a far more intelligible kind. The success of the ''toXs. "
Bank was the success of the moneyed interest, of the
dissenting, semi-republican, interest. They suspected,
or affected to suspect, a revival of the reign of the
Saints^. The country squires and the country
clergy had not suffered from the government of the
last male Stuart as much as the towns and town
clergy had, and the country was far more bitter
against non-conformity than the towns were^. In
fact, they had now to deal with a different kind of
dissent. At the end of the seventeenth century the
chief sectaries of town and country were the Congre-
gational or Independent body. In the counties, and
especially in the agricultural districts, the Quakers
were now exceedingly numerous, and their tenets
^ This is the meaning of the objection which was constantly
taken to the Bank at its inception, that banks had always existed
in republics only, and that a bank and monarchy were incompa-
tible. Cromwell and his army of Independents were still, and
long remained, a scare.
^ On the other hand, the country squires and the country
clergy had suffered far more from the charges and changes of the
Commonwealth than the towns had.
1 2 First Nine Years of the Bank of England, [i.
1694. were distasteful to the dignity and injurious to
"~~ the interests of the clergy, for they repudiated the
ordinances in which all other Christians were agreed,
and made a serious difficulty in paying tithes^. The
Land Bank of Chamberlain was to be a difficulty of the
future, but he and the projectors who acted with him
swelled the chorus of distrust.,
Macaulay is I think right in saying that the pro-
ject of the Bank passed the Commons because, as
the House had already voted extraordinary supplies,
to the extent of four-and-a-half millions, it did not
seem obvious how to find money and repudiate the
Bank scheme. There was some danger from the
Lords, at that time peculiarly hostile to the moneyed
men. But Carmarthen, afterwards the Duke of Leeds,
who was always a sensible politician, and occasionally
a patriotic one, though marvellously self-seeking
and sordid, came to the rescue, and arguing in
the spirit, though not in the words of the famous
apophthegm, that the King's government must be
carried on, dissuaded the Lords from altering a money
bill. The Bank of England was saved in the Lords
by twelve votes. The minority did not protest.
TU poiiti- It may be doubted, if the subscribers to the Bank of
cal situa-
tion. England had known what we now know, whether they
' The earlier Quakers were country rather than town folk. I
have been told by old members of the Society of Friends, that the
change from town to country life was generally effected from two
to three generations ago, and was principally owing to the diificulty
of paying tithes. This tenet of the Quakers was made an argument
against giving relief to this sect in 1722. See Protests of the
Lords, for that year, January 17.
I.] The Great Experiment. 13
would have thought the Government stable enough 1594.
to he trusted. While Montague was seeking to sup- **~
port the King in the exertions which he was making
for the peace of Europe, Marlborough had betrayed
to St. Germains and Versailles the intended attack on
Brest, and had brovight about the death of Talmash,
and the entire failure of a promising adventure, which,
if successful, would have annihilated the remains of the
French Navy, and have checked French privateering.
It was generally believed that a new descent on the
English coast was in preparation. It was rumoured
that the Pope was on the point of granting consider-
able assistance in money to the exiled King. The
wants of the Treasury were pressing, and in March
of this year the Lord Keeper and the Lords of the
Treasury were begging for a small loan, according to
custom, from the Common Council of the City, who,
we are told, assisted them for a commission ^ The
storms of the spring had been exceptionally severe,
and one is said to have brought about a loss of
£400,000, a great sum, when it is known that the
whole of the English mercantile marine was under a
quarter of a milhon tons burden ^- Besides, the cur-
rency was in the most deplorable condition, worn and
chpped ; nor did the execution of coiners and clippers
by batches arrest the evil. This state of the
' This is stated by the author of a pamphlet on the Land Bank :
' Remarks on the proceedings of the Commissioners for putting in
execution the Act passed last Session for establishing a Land Bank.'
1696.
^ Even in January, 1702, the mercantile marine of England
amounted to only 261,222 tons. Macpherson.
3°-
14 First Nine Years of the Bank of England. [I.
1694. currency was soon to intensify a serious crisis in
" the history of the Bank ^.
^^■ook- In the infancy of what we may call stock exchange
transactions, sudden and violent fluctuations in price
were normal and expected. But they did not deter
the public from trafficking in these securities, or
actions, as they were called^. Within a short time, a
year or two, a few months, even a few weeks, stocks
would vary enormously in value. Hudson Bay stock
in the space of two or three years fell from 250 to
80. East India stock, which was at 146 in the be-
ginning of the year 1693, stood at 37 in May 1697,
and rose again to 142 in April 1700. The stock of
the English East India Company, the rival of the old
Company, and subsequently amalgamated with it,
was at 46-1- in March 1699, and rose to 219 in August
1703. In short, these investments were in the
highest degree speculative undertakings, though both
the stocks in question had a long and memorable
existence. I could give further illustrations from the
Guinea and the Levant Companies, engaged in foreign
trade ; from the Sword-blade, Lutestring, Paper and
Copper Companies, engaged in manufactures and
mining, and from a host of other trading associations,
which have now been long forgotten. The seven-
teenth century was one of great discovery and activity.
Men who were engaged in commerce had realised,
' The harvest of 1693-4 was the worst which had been known in
England for over thirty years (average of wheat, 63s. 5jcZ.), and with
one exception (i 66 1) the worst ever recorded since Elizabeth's reign.
^ The coffee-houses which the brokers and jobbers frequented
were Jonathan's and Garraway's.
I.] The Great Experiment. 15
during the last quarter of that century, fortunes 1694.
which were gigantic by contrast with any previous
experience, and generally by the machinery of asso-
ciated or joint-stock enterprise. People were there-
fore prepared for similar successes, if they could only
discover the best means for trading in money and
goods.
The want of experience as to the basis on which a ignorance
1 • T • T T 1 of the
subsidiary currency must rest, m order that depre- ^Wncipies
. . 114. I, -J J ofBanUng
ciation or even bankruptcy may be avoided, was one prevalent.
intrinsic peril which the Bank of England ran in its
earlier days. The other peril of the same character
was the highly speculative character of all joint-stock
enterprise. On the other hand, the Bank was
strengthened by the confidence which was shown in
its directory, by the fact that the directors, customers,
and shareholders of the Bank contained most of the
moneyed men, and by the unwearied vigilance of those
who watched in the Bank's infancy over its fortunes
and solvency. The City magnates of this period
lived over their shops and warehouses. The rent of
a London shop, dwelling, and garden in the days of
William and Mary was by no means high. I find for
instance in my researches \ that in 1697 * 'good
merchant's house,' close to the Koyal Exchange, with
warehouses and vaults, is offered at a rent of £60
a year ; that four new brick houses with shops in the
City are to be let at £20 a year each, and can be
leased at this rate for forty years ; that two houses
were to be let in Fleet Street at £44 a year each;
' All these examples are taken from Houghton's Advertisements.
1 6 First Nine Years of the Bank of England. [I.
1694. that an ale-house in the Strand, with three rooms on
each floor, could be had!for from £20 to £30 a year;
that a house in the Old Jewry was let at £40 a year ;
and that enquiries were made for a house between
G-uildhall and Bread Street at from £30 to £50
a year according to accommodation. I could mul-
tiply these illustrations, for I have not taken more
than one year, and I have several more notes to the
same effect, even for this year.
Attach- At the end of the seventeenth century the Londoner
Londoners lived in Loudou. There at least his treasures were
° ^ * ^' safe. He might count on being forcibly relieved of
them, if he journeyed five, even two miles, out of his
beloved city, with valuables in his possession, for
footpads haunted Islington and Chelsea. He was
on intimate relations with all those who were en-
gaged in commerce. In our days, the knowledge of
a trader's solvency is an art in which the best
instructed and most wary may be deceived. In
those times it was a habit which every man of busi-
ness had necessarily cultivated. We may depend on
it, that in the old days, before the Bank of England
existed, and the Lords of the Treasury went, cap in
hand, with the Lord Keeper to raise a loan among
the thriving citizens, there was no difficulty in learn-
ing where a full strong box was to be found.
There was good reason for the union of City
men. Outside London, the merchant and moneyed
man was heartily hated. He was generally a Whig,
and almost as generally a dissenter. But his rapidly
growing wealth made him especially hateful to the
I.] The Great Experiment. 1 7
country gentlemen. John Briscoe, the literary ad- 1694.
vocate of Chamberlain's Land Bank, o£ which -we '^
shall hear something hereafter, called him a usurer,
and thought he had suflSciently dealt -with him when
he gave him this name. Perhaps the most bitter
and malignant sketch which the Tories ever made of
him is found among Davenant's works, under the
name of ' the true picture of a modern Whig^.' Ten
years before, he had gained the experience of how
his political foes would treat him when they had the
ascendancy, and his memory as well as his interest
made him resolute in defending the settlement of the
Eevolution, and afterwards, of the Protestant suc-
cession. Up to the date of that Eevolution, it had
been a tenet with princes that the subject should
conform to their religion. The Eevolution insisted
that the King should henceforth conform to the
religion of his subjects. Now no analysis of the
early fortunes of the Bank of England would be ac-
curate unless one took into account the political bias,
the religious convictions, and the exceptional resources
of those who founded it and guarded its infancy.
But, in point of fact, nothing could be less like the The Bank
principles of modern banking than the action oiprofits.
those who founded the Bank of England was. The
capital of the Bank was lent to the Government, and
* Macaulay seems to think that the Member for Bedwin, who
was found in company with Poussin at the memorable Blue Posts
supper, was a different man from the economist. But this is
not the case. They are the same. Davenant's pamphlet went
through many editions during Anne's reign. To me, it is the most
stupid libel I ever read.
C
1 8 First Nine Years of the Bank of England. [l-
1694. to the last shilling. The security to the share-
" holders was the good faith of Government, and only-
two years had elapsed since the Government had
begun the public debt with the annuities. The
lottery loan of a million was an operation undertaken
simultaneously with that of the Bank of England,
and had been a rapid success. But it was to be
extinguished in sixteen years. The loan of the Bank
was the first permanent loan, for though provision
was made that the privilege of the Bank should cease
in 1 706, if its capital were repaid in 1 705, no man
of sense imagined that any Government would ever
extinguish so useful a corporation.
The first prospect of a dividend then which the
shareholders had was the eight per cent, which the
Government stipulated to pay on the loan, with
£4000 a year for management. The other sources
were, the circulation of their own bills, which they
issued on the loan which they had made, and on
which they agreed to pay interest, and the profits
which they might make from the capital which their
customers deposited with them. They invited these
deposits by the offer of four per cent, interest, and it
was one of the criticisms of Davenant^ on the Bank
that this expedient of stimulating deposits by the
pledge of an income to the depositor was a hindrance
to energy and enterprise. But they did not take
precautions to secure the convertibility of their notes,
and when the pressure of the recoinage came, they
^ Discourses on the Public Kevenues and Trade of England, Part
I, page 265 (1698).
I.] The Great Experiment, 19
■were driven to the most desperate shifts in order to 1694.
support their credit. Nothing but the resolution of ^^~'
the directors and shareholders to support the insti-
tution by any and every sacrifice could have saved
it from the obvious risks of the system which they
adopted. By their first charter they were permitted
to lend on pledges. But they do not appear to
have availed themselves of this power, though it
is probable that they required the deposit of dock
warrants when they made advances to some persons,
or on some kinds of goods 1.
Bearing in mind then that the Bank was a Whig
institution, devoted to the Whig settlement of the
constitution and to the Whig administration which
had carried it through the House of Commons, its
difficulties were not slight when we look at the
events which occurred in the latter half of the year
1 694. Though no material gain had been made by
the allies in the war, yet, on the other hand, 1694
was the first year in which Louis XIV had gained
no substantial advantage. But, on the other hand,
the Government at home was discredited by the
scandal of the Lancashire trials, and the winter was
rendered gloomy by the sickness and death of the
Queen. This event recurred on Dec. 27, old style,
after an illness of only five days.
I find from a friendly pamphlet published in 1695, Godfrey's
entitled ' A Short Account of the Bank of England,' tuBankof
T • T T • 1 England.
that the directors had met their obligations to the
Government by a payment of 60 per cent, in cash,
^ They would not make advances on ' perishable goods.'
C 2
20 First Nine Years of the Bank of England, [i.
1694. the remaining 40 having been satisfied by Bank bills.
The writer says : ' Some find fault with the Bank
because they have not taken in the whole £1,200,000
which was subscribed, for they have called in but for
£720,000, which is more than they now have occasion
for. They have paid into the Exchequer the whole
of the £1,200,000 before the time, and the less money
they have taken to do it, so much the more have they
saved the public. The rest is left to circulate in
trade. There is £480,000 in the subscribers' hands,
ready to be called for when they want it.' It is
probable that this pamphlet was the work of Godfrey^.
The business of the Bank is described as follows
in the same pamphlet : ' They [the directors] lend
money on mortgages and real securities at five per
cent, per annum. If the titles of land were made
more secure, money would be lent on land at four
per cent, per annum, and in time of peace at three
per cent.2 Foreign bills of exchange are discounted
at four and a-half per cent. ; inland bills and notes
for debts at six per cent. They who keep their cash
in the Bank have the first of these discounted at
three per cent., and the other at four and a-half.
Money is lent on pawns of such commodities as are
not perishable at five per cent., and on the Fund of
' Since writing the above, in which I quote from the contem-
porary pamphlet, I have found from a reprint of this tract, a copy
of which is in the Bank of England, that the Account was written
by Michael Godfrey.
^ I doubt whether they really lent money on mortgage, or indeed
on anything but mercantile bills and goods. They certainly never
established a pawnshop for the poor.
I.] The Great Experiment, 21
the City of London Orphans at five per cent.^' The 1694.
directors contemplate, for the ease of the poor, estab- "
lishing a 'Lombard' (i.e. a pawnbroking establish-
ment) on small pawns at a penny per pound per
month.
The same writer estimates the loss which the
public had endured by the goldsmiths and scriveners
who had failed during the last thirty years at
between two and three millions, though he does
not state whether he includes in this sum the de-
posits left by them at the Exchequer and seized by
Charles in 1672, and to which reference has been
made before. But he hints, not obscurely, that the
state of the coinage, soon to be a trouble at the
Bank, if the trouble had not already begun at the
time this pamphlet was written, was traceable to
those persons. ' If the bulk of the money of the
nation which has been lodged with the goldsmiths
had been deposited in the Bank four or five years
past, it had prevented its being so scandalously
clipped, which one day or the other must cost the
nation one and a half million or two million to
repair it^.',
' The Orphans' Fund was not in a satisfactory state at the time,
the City having carried a bill dealing with the Fund in 1695, after
bribing Speaker Trevor, and Sheffield, Lord Normanby, to all ap-
pearance. See Protests of the Lords, April 18, 1695.
^ In an unfriendly pamphlet entitled ' Eemarks on the pro-
ceedings of the Commissioners for putting into execution an Act
passed last Session for establishing a Land Bank' (1696) the
writer says, ' As for the goldsmiths, no one expects any reforma-
tion from them, or that anything will make them honest but
a catchpole.'
2 2 First Nine Years of the Bank of England. [I.
1694. 'Some think,' says the author, 'that a currency
" of Bills or Tallies can be enforced. But nothing
makes Bank Bills current but only because all
those that desire it can go when they wiU, and fetch
their money for them ; and to force anything to pass
in payment but money would soon end in confusion.'
' To make anything current in payment but specie
money would cause that nobody would trust any
Government on any loans whatever.'
The Bank allowed twopence a day interest on
Bank bills, and so drew money out of the goldsmiths'
hands, in exchange for biUs, and this naturally
made the goldsmiths their enemies, as they allowed
no interest on deposits. The writer states that
'this allowance costs the Bank £36,000 a year,
a charge which they would gladly get rid of.' Of
course this means that they had issued bills to the
whole amount of the Government loan at three per
cent, interest on the bills or notes. But he also
asserts that this is a clear annual gift to the nation
out of the Bank's own fund, and on account of the
deposit of moneys, for which the owners had pre-
viously received nothing.
Frincipies In a pamphlet published the year before ^ and
on which .
the Bank probably written by Paterson, the writer gives an
founded, accouut of the principles on which the Bank of
England was projected. 'There is,' he says, 'a pre-
valent error, that the stamp or denomination gives
or adds to the value of money,' and that the fallacy
of this opinion was detected by those who, some
' A Brief Account of the intended Bank of England, 1694.
I.] The Great Experiment. 23
years before, had projected the Bank. ' It was then 1694.
proposed that a public transferable fund of interest '
should be established by J^arliament, and made con-
venient for receipts and payments in and about the
cities of London and Westminster, and to constitute
a society of moneyed men for the government thereof,
who should be induced by their interest to exchange
for money the assignments upon the fund at every
demand.' And he goes on to say that the promoters
of the Bank had seen that banking must be based
on the three following principles : —
1. That all money, or credit, not having an
intrinsic value to answer the contents or denomi-
nation thereof, is false and counterfeit, and the loss
must fall one where or other.
2. That the species of gold and silver being ac-
cepted and chosen by the commercial world for the
standard or measure of other effects, everything else
is only counted valuable as compared with them.
3. Wherefore all credit, not founded on the uni-
versal specie of gold and silver, is impracticable, and
can never subsist neither safely nor long, at least
till some other species of credit be found out, and
chosen by the trading part of mankind, over and
above or in lieu thereof.
After describing the actual security of the Bank
and its prospects of successful trade, and stating
that no dividend will be paid without some months'
notice, in order to give the proprietors the choice of
keeping or disposing of their stock, he states, ' The
politicians distinguish between the interest of land
24 First Nine Years of the Bank of England. [I.
1694. and trade, as they have lately done between that of
" a king and his people,' — a hit at the rival project
which was soon to be before Parliament, — and says,
'If the proprietors of the Bank can circulate their
own foundation of £1,200,000 without having more
than two or three hundred thousand pounds lying
dead at one time or another, this Bank will be in
effect as £900,000 or £1,000,000 of fresh money
brought into the nation.'
He then predicts, that so far from being an injury
to borrowers, whether they be landowners or traders,
it will lower the interest on money; and he points to
the Banks of Amsterdam and Glenoa, as well as others,
to confirm his prediction, and concludes that the
enemies of the Bank are threefold: (i) the Jacobites,
who know what its effects will be on their patron
Louis of France ; (2) some few usurers and brokers
of money; (3) those who have not wherewith to
trade, unless it be, like Haman of old, for whole
nations or a people at once. By the last two classes
the writer appears to mean the goldsmiths, and
Chamberlain with his associates.
I have stated at some length, and by quotations
from these two important contemporary pamphlets,
what were the purposes and what were the hopes of
those who founded this institution and supported it
during the perils of its infancy. What these perils
were, we shall soon have occasion to see. It is when
a rival project was attempted, and collapsed so
ludicrously, that the adverse criticism of the Bank
and its purposes begins, for the arguments alleged
I.] The Great Experiment. 25
against it during the passage of the Tonnage Bill 1694.
are not worth discussing ^ ^*~'
The advocates of the new adventure constantly Friers of
allege, and the apologists of their rivals confirm the stoch in
allegation, that the right of using their stock for
issue, for loans, and for discounts, in short of be-
coming a bank under charter, was a capital feature
in the project. Now the first note which Luttrell
makes of the Bank's action is on August i , on which
day he states that the Bank had paid £112,000 into
the Exchequer by their own bills. It is plain, then,
that as soon as the subscription made it clear that
the project would be a success, they set to work to
engrave a plate, and to print their bills, and this
while they were occupying Mercers' chapel. Nor
do I conceive that they began the principal business
of their undertaking, the discount of commercial bills,
foreign and inland, for some weeks after the legal
existence of the company commenced. My reader
will see that for the first eleven weeks in my table
of the price of bank stock this price was slightly
above par, ranging from joo to 103. These prices,
I am disposed to believe, are the average of the
week, and represent the prospects of the Bank as a
trading corporation before it began to trade and its
policy was known. Luttrell, under date of October 25,
1694, says that Bank-stock was that day 105.
The next week's quotation, November 2, is a drop
to 5 7, with the heading ' The money paid in.' The
public had then learned that only 60 per cent, of the
' See Macaulay, chap. xx.
26 First Nine Years of the Bank of England. [I.
1695. company's capital had been called np, and no doubt
^~" found out that liabilities in the issue of £480,000 on
credit had been created. The stock, therefore, now
estimated on the actual capital paid by the pro-
prietors, was below par, and remained at or below
par for four weeks. I cannot but infer from this
that the pubhc which traded in this new security
were not yet clear as to what would be the benefit
to the shareholder in venturing on the undertaking,
the proprietor in which was in the risk of a call, if
the project was found to be in difficulties, and subject
to the additional liabilities of an emission of bills,
based certainly on unpaid capital, but possibly on
deposits or commercial loans. The quotation I con-
fess of November 2, when compared with that of
October 26, staggered me at first. But I have no
doubt that the above is the true explanation of the
market.
Fnces of Be this as it may, it will be seen that the company
stock in . / 1
1695. rapidly gained pubhc confidence. The stock goes up
to 70 on November 30, and though it suffers a check
after the event of the Queen's death on December 27^,
it goes on steadily rising, till on the 22nd of March,
1695, it stands in my register at 99 ; and according
to Luttrell, who says a dividend at the rate of six
per cent, for the last nine months was declared on
March 20, was on that day at 100. From this
' Luttrell says, Jan. 26, 1695, 'Every £60 in the bank that was
paid in, in principal money, is now worth £90 ;' and on Feb. 2
he states that ' the bank has declared that so soon as the Parlia-
ment settles the funds, they will advance his majesty two millions
at 5 per cent., having £1,200,000 by them in old gold and silver.'
I.J The Great Experiment. 27
date however the tendency is downwards, though i695.
the stock keeps at 90 to 92, generally at the latter "
figure till June 14, when it begins to rise, and on
June 28 is at 99 again. I find nothing to account
for this decline, beyond the general uncertainty of
a campaign in which William was commanding
in person, except it be the rumour that at a general
court on May 16, the Bank had determined to es-
tablish a branch at Antwerp, where they were to
coin money to pay the army in Flanders.
For this or for some other purpose the Bank The
sent three of their directors, Sir James Houblon, at Namur.
Sir William Scawen, and Michael Godfrey, to the
King's head-quarters. After their departure the
Bank made a temporary advance on June 15 of
£150,000 to the Government, on the security of two
new taxes ^. On July 25 the Bank had letters from
Sir James Houblon and Sir William Scawen an-
nouncing Godfrey's death in the trenches at Namur.
The readers of Macaulay will remember how he
has told the story. Luttrell, who is my authority,
says that ' the three Bank directors had dined with
the King in his tent, and had waited on him into
the trenches to view the same.' I am not quite
sure that Macaulay's informants were not unwilling
to set down the Whig money-man's death to
indiscreet and meddlesome curiosity. Luttrell says
that the news of Grodfrey's death occasioned a fall of
two per cent, in the stock. This is confirmed by
my register.
' Luttrell, June 15.
28 First Nine Years of the Bank of England. [I.
1695. It is not impossible that the scandalous bribery
'^ of which the City of London and the East India
Company had been guilty and which was detected
in March, 1695, — of which the first victims were
Gruy and Craggs, the next Sir John Trevor, the
Speaker, who had to put the question to the House
that he was guilty of a high crime and misde-
meanour, and who was next day expelled, — and the
grave suspicion that even more considerable people,
such as Seymour and Leeds ^, were compromised, may
have produced a general feeling of distrust. For
though the Bank was a Whig corporation, and the
East India Company was a Tory association, the
discredit of one great trading company naturally
had its influence on other companies even at that
time ^.
Under date of August 15 Luttrell informs me
that Mr. Charles Buncombe, of whom more wiU be
heard hereafter, ' sold all his effects (amounting to
£80,000) in the Bank of England, and that Lord
G-odolphin had done the same and transferred
them to the Orphans' Bank.' This action seems
like one of those attempts to discredit the repu-
tation of the Bank which were repeatedly made,
especially and on a large scale in the next year.
During this week, as my record informs me. Bank-
stock fell two per cent. But the news of the cap-
ture of Namur, which the friends of the Bank
^ Macaulay, chap. xxi.
"'■ According to Postlethwayt, the Bank advanced the Govern-
ment in 1695 a million and a quarter on the security of the
customs, the repayment being spread over four years.
I.] The Great Experiment, 29
always ascribed to the promptitude with which the 1695.
directors supplied the wants of the King's army, — *^~
sent the stock up again, which nearly reached par in
the month of September. This is perhaps further
explained by the fact that on September 26^ the
directors declared a dividend of four per cent, on the
paid-up capital, i.e. sixty per cent., ' which is to be
made on Oct. 10, the second dividend since their
establishment.' But probably the news of Sept. 28,
' that the Bank of England, not having their success
in the Mint at Antwerp for coining of money to
pay our army as they expected, have borrowed
£200,000 of the Bank at Amsterdam at four per cent.,
the King giving his word at the same time to see
them reimbursed, which money they have paid to
his majesty's army in Flanders without remitting
hence ^,' may account for the fall of five per cent,
between Sept. 27 and Oct. 4. ' Sir John Houblon, a
lord of the Admiralty and governor of the Bank, was
chosen Lord Mayor this day^' (Sept. 28). Scawen,
who had gone to Namur in the summer with Godfrey,
was made deputy governor a day or two before.
During October and November the stock was almost
stationary at 94. On October 11 the Parhament
was dissolved, and according to Luttrell, the Princess
of Denmark (Anne) bade her servants all vote for
Sir Stephen Fox and Charles Montague for West-
minster. Marlborough now saw that it was expedient
to be on good terms with the Bank and its political
patrons, and the order, no doubt, proceeded from him.
* Luttrell, September 26. "^ Ibid., September 28. ' Ibid.
30 First Nine Years of the Bank of England. [I.
1695. Between December 7, 1695, ^'^^ January 31, 1696,
" the stock of the Bank rose rapidly. It -was 97 at the
first date, and 107 at the second, having stood at 108
in the week ending January 10. But a reverse was
at hand. The particulars of the situation require
a minute statement, for on February 7 the stock fell
fourteen, and next week another ten. Two circum-
stances contributed to this prodigious fall, which the
public, as we shall see, fairly understood, for trouble,
the severest trouble the Bank ever suffered, was
coming on it. I am speaking of monetary, not of
political events, though the latter were of the gravest
and most alarming kind. The king of France had, to
his great chagrin, lost Namur ; and so he permitted,
was conscious of, and perhaps even encouraged, a plot
for murdering William.
The two circumstances to which I refer were the
state of the currency and the scheme of the Land
Bank.
Tiie The condition of the English currency had become
currency, scaudalous. It scems that much of it was clipped
to less than a third of its proper weight. If I can
rely on an exceedingly rare and valuable work^
in the Bodleian Library, the study of which is es-
sential for the interpretation of the foreign ex-
changes during the period of which I am writing,
there were still in circulation in England coins
dating from the days of the Plantagenet kings, and
when in proper condition, these were taken at their
^ A General Treatise of Money and Exchanges, 1707 (by Alex-
ander Justice).
I.] The Great Experiment. 31
modern value. Even some of the base money of 1695.
Henry VIII and Edward VI had escaped Ehza- "
beth's melting-pot, and was duly appraised by the
dealers in currency, for I find the coins of issues
in which half the metal was alloy, and others of
which two-thirds was base, in my author's list,
with their worseness accurately given. A vast quan-
tity of foreign coins also circulated in England;
French pistoles, German dollars, Spanish pieces-of-
eight, Dutch florins, moidores and ducats, and others
whose very names are now forgotten. The English
Mint levied on the bullion coined a pretty heavy
seignorage to cover charges, for the coin had to carry
not only the fourteen pence per pound charged for
manufacture, but the cost of melting and refining.
Now such a seignorage and charge must have
led to a considerable importation of foreign coin,
which in the exchanges was estimated at its bullion
as opposed to its Mint value. A few years later
the Mint coined money free of charge, and provided
for the cost out of the general taxes.
It is difficult to understand why the crime of clip- The crime
1 1 T f» I 1 of clipping.
pmg became so common at the end 01 the seventeenth
century. It was not due to the negligence of the
law, for clipping the coin was a capital felony, and
the Old Bailey witnessed the sentence of death on
clippers by the dozen, as Tyburn did their execu-
tion. Godfrey hints not obscurely that the gold-
smiths knew a good deal about it. But I imagine
that there is a fashion in crime, and I am sure
that the morals of the Court after the Eestoration
3 2 First Nine Years of the Bank of England. {I.
1695. were an evil example to the public. Luttrell tells
" us that men made fortunes by clipping, and men-
tions one person in particular who offered a large
sum for his life after the crime had been brought
home to him^. The men were hanged with the
formalities of the old treason laws, the women were
burnt. But the deterrents were ineffectual, and
clipping went on. The fact was that buUion was
becoming so much dearer than light coin, taken
by tale, that the temptation to clip, melt, and
export was almost irresistible, and turned a fashion
into a facility. The night smugglers of the south
coast, especially those of Eomney Marsh, who were
called at that time 'owlers,' were the agents by which
the bars were exported and sold.
JVew Parliament, as usual, tried penalties before it
pemxltics.
undertook reform. The Act of 6 & 7 William III,
cap. 17, attempted to check these malpractices, and
the particulars of the measure are a striking illustra-
tion of that unwisdom and ignorance of monetary
laws which pervaded the legislature, of which in-
deed they were to give shortly a still more striking
proof. The second section of the Act inflicts a penalty
of ten pounds for every twenty shillings on persons
who sell undipped coin for more than it was coined
for ; the third puts a penalty of £500 on any one
who casts ingots or bars of silver ; the fourth pro-
vides that any person who buys or sells or has
in his possession cUppings shall be branded on the
right cheek with a capital R, be fined £500, and be
' Moor of Westminster, under date of July 13, 1695.
I.J The Great Experiment. 33
imprisoned till it be paid. The fifth section disables 1695.
every person from transporting bullion, unless it ~*^~
be stamped at Goldsmiths' Hall, and oath^ be made
that it is not the produce of English coin ; and
the sixth that unstamped bullion may be seized and
confiscated by the Custom House ; while by the
seventh section goldsmiths alone were allowed to
deal in bullion. The eighth section even allowed
the Warden with two assistants of the Goldsmiths'
Company, or two justices of the peace, to break into
and search any house for bullion, and if it be found
there, the owner of the house must prove that it
is not the product of melted coin or of clippings.
On and after May i, 1695, the sheriff of counties
is to pay forty pounds to any one who procures the
conviction of a clipper, the informant being per-
mitted to sue the sheriff if he delays to satisfy
the claimant of the reward. He is to pay the re-
ward out of public moneys in his hands, and if he
has no sufficient fund, he is to issue a warrant,
which the Treasury has to honour. If a person
guilty of the crime can get two other clippers
convicted by his evidence, he is to be pardoned ; and
an apprentice who informs successfully against his
master is to be at once made a freeman of the City.
These provisions and penalties, some grotesque tu Ad
in their absurdity, some atrocious for their severity,
' Sworn-off bullion, i.e. bullion which was declared on oath not
to be the produce of English coin (a formality retained till the
resumption of cash payments), was about three half-pence an ounce
dearer than unsworn gold. Of course this meant that three half-
pence an ounce in gold was the price of perjury.
D
34 First Nine Years of the Bank of England. [I.
1695-6. and one, the eighth, subjecting private houses to
" domiciliary visits, in the highest degree opposed
to English habit and sentiment, did nothing to
cure the evil which they pretended to deal with.
Regulations restraining the export or import even
of bulky commodities are rarely successful. In an
age when craft were light, harbours were easily
accessible, and the preventive service scanty and
inexperienced, they were easily evaded. But such
regulations were sure to be a total failure if the export
or import of the precious metals was in question.
It appears, as might have been expected, that some
men who were most zealous and active in searching
houses, but ■were clippers at the same time, exhibited
this energy in order to mask their own proceedings,
and were sometimes detected and punished because
they could not resist the temptation of robbing
the houses which they searched.
The price Houghton has preserved a weekly register of
%iZriT the price of sterling gold by the ounce, of sterling
silver by the ounce, and of guineas during the whole
year 1695.. I have put this register at the end
of these pages. According to Godfrey, in his Short
Account of the Bank of England, written before
his unlucky, journey into Flanders, and published,
as I should conclude from internal evidence, in June^,
1695, ^^^ Bank had only bought £12,000 worth
of bullion, all silver and all Spanish. During the
' He deprecates the creation of another Bank ; and we learn
from Luttrell, nnder date of July 23, that ' the Bank for letting
out moneys at £3 io«. per cent, upon land is now completed.'
This is of course Chamberlain's project. '
I.] The Great Experiment. 35
year 1694 the price of gold is from 80s. to 8is. 6(^., 1695-6.
of guineas from 21s. iO(^. to 22s. 6d., while silver
oscillates between 5s. id. and 5s. 5^^. an ounce. These
prices I presume are of these metals and guineas
in silver coin, and the price of Bank-stock during this
time seems to confirm the statement that the Bank
abstained from bullion operations, and left them,
as the Act of the spring directed, to the goldsmiths.
In January, 1695, ^^ price of the precious metals
began to rise, silver being far less afiected than gold ^,
but sufficiently so to indicate a serious disturbance in.
the foreign exchanges, the nature of which I shall
illustrate lower down. The price of gold on January
II is 82s. 6(^., of guineas 22s. q*^. ; on January 18,
83s. and 22s. \od.; on January 25, guineas were
at 23s., on February i at 23s. 4d. On February 15
gold was 86s., and next week guineas rose to 25s.
On March 8 gold was 88s. ; on March 1 5, 90s. ; on
March 29, 91s. ; on April 12, 92s. On May 10 gold
and guineas were at 95s. and 26s. ddt,. ; on May 17 at
98s. and 28s. i^d. ; on May 24 at 103s. and 29s. ; on
June 7 at io6s. and 29s. 8d ; and on June 14 at
109s. and 30s. This is the highest point for gold
bullion and coin which the chronicler registers in
1695-
On June 21 the prices are 107s. and 29s. dd.,
• Silver was virtually the currency of the country, and throughout
this crisis the Government was ahle, as Governments are able, to
regulate the price of the bullion which is the material of the
popular and nearly universal currency, by the coin which they
produce. It is quite another thing to try the regulation of two
kinds of bullion and two currencies, both equally universal.
D 2
3 6 First Nine Years of the Bank of England. [I.
1695-6. and. next week guineas are at 29s. 7^. On July 5
"~" they are at 107s. dd. and 29s. 9^^. ; on July 12, at
io8s. bdb. and 29s. \od., guineas falling to 29s, 9cZ. on
August 2. On August 30 they are at 1 08s. and 2 9s. 8(^.
On September 30 at 29s. td. Gold is at io8s. till
October 1 1, when it falls to 106s. 6^., and remains
at this price till November 22, when it is again io8s.;
after which there are very few and at last no
quotations of bullion. But on October 1 8 guineas are
at 29s. 4cZ.; on November 15, 29s. ^d.; on November
22, 29s. 7cZ.; on November 29, 29s. <^d.; and on
December 13, 29s. dd. Quotations of guineas fail
for the first three months of 1696. On April 17
they are quoted at 22s., for by this time the new
milled money was getting into the hands of the
money-dealers and bullion-merchants at least; and
by July 10 of the same year gold is quoted as 82s.
again, and silver at 5s. id. The normal relations of
gold bullion and coined silver of standard weight
and fineness were nearly restored, though the distress
had not ceased.
TU I will now proceed to illustrate the same facts
^^nges. from the foreign exchanges. It wiU not be necessary
to trouble my reader with details of currencies
which, having long been superseded, cease to possess
any living interest, and I will merely take one example,
that of Amsterdam. I select this place, because at
this time Amsterdam and its bank were to the com-
mercial world what London and its bank were to
become at a later time. But besides this, during
the war which ended with the Peace of Eyswick,
I-] The Great Experiment, 37
and indeed during the war which ended with the 1695-6.
treaty of Utrecht, at the beginning of which latter ~^*~
war my enquiry is concluded, Amsterdam was the
place to which supplies granted by the English
Parliament for the use of the war, and transmitted
by bills or by money, were necessarily sent, so that
Amsterdam, more than any other place, dominates
the Enghsh exchanges^.
Now the par of exchange between Amsterdam
and London was designated in the jargon of the time,
but a jargon entirely understood by dealers at that
period, as 37^ shilHngs Fleems gross. At this time
of day it signifies nothing to us what this phrase of
the exchange means. It is as obsolete and probably
as uninteUigible to any practical man now, as
the books or rather clay tallies of the Babylonian
bankers which have been explained by Chaldaic
scholars are to Lombard Street Englishmen. But in
these figures lies the interpretation of the terrible
crisis through which England passed during the two
years 1695-1696.
I have appended to this book an interpretation of The
the figures which I have collected as to the rate oi^ltn
exchange between London and Amsterdam which (^J^/*^"
ruled during these two years, and with them a table
which gives the rate of discount on English bUls
drawn on Amsterdam. In using the second table, it
^ On this fact see Alexander Justice, General Treatise on
Moneys and Exchanges. The work is excessively rare, but it is
in Bodley, though the copy there says that there is none in the
British Museum. Works which are real handy books soon wear
out.
38 First Nine Years of the Bank of England. [T.
1695-6. will be seen that the amount which the exchange on
*^ Amsterdam stood at represents the discount or
premium, the latter unfortunately rare, on which an
English biU on Amsterdam was to be negotiated and
met. For example, on June ii, 1696, the Bank of
England drew £100,000 on the Bank of Amsterdam,
and put the bills to the King's credit. At that date,
the rate of exchange stood at from 30' 6 to 30'4, and
on referring to the third table it will be seen that
this means that the transaction implied an adverse
rate of from 2i"5 to 2 2 "2 per cent., or that for every
£100 the Bank of England drew they had to pay
the Bank of Amsterdam, when the bills reached
maturity, from £121 los. to £122 4s. sterling. But
I must reserve my comment on this action of the
Bank of England till I deal with the position in
which they stood to the Government after the failure
of the Land Bank and the crisis which it involved.
Discounts The Calculations of Mr. Justice in 1 707, though at
biiis^ that time a war was going on, which, compared with
William's war, was extraordinarily costly, do not con-
template a rate of exchange which is more adverse than
32*3 per cent. But on August 16, 1695, j^^t before
the taking of Namur, the exchange on Amsterdam
fell to its lowest rate, 27, which means that the
discount of an English bill drawn on Amsterdam was
36"9 per cent.^ The experience of modern times,
when commercial transactions are understood to be
' The exchange on Amsterdam was always more unfavourahle
than that on Eotterdam or Antwerp. The reason is obvious.
Amsterdam was the centre of commerce, and could control the
exchanges. The difference is generally •2.
I.] The Great Experiment. 39
the life of industry, and when fractional, and to the 1695-6.
ordinary student, trivial changes, are significant, and
even portentous, may almost decline to believe that
business could be carried on under these tremendous
risks. It is the function of the historical economist
to state them, and as far as his individual powers go,
to interpret them. The founders of the Bank of
England understood and grappled with them, for
they saw how necessary it was that English trade,
i.e. English bills, should be relieved from these
recurrent risks and constant disadvantages, to say
nothing of the cost of the old system of goldsmiths'
discounts.
I conclude that the interpretation of the exchanges
during this eventful time is to this efiect. The rate
between London and Amsterdam designates or
interprets the ease or the difl&culty with which coin
or bullion was likely to be forthcoming in order to
meet bills when they come to maturity, such coin
being, for the purposes of exchange, considered as
bullion. All the moneyed men of course knew, that
whatever kings or parliaments might aver to be the
value of their currency, would be, if in error, nega-
tived the moment these coins got out of any parti-
cular jurisdiction, and would be discounted whenever a
commercial transaction was completed, and in view of
the above-named condition being satisfied. They also
knew that all hindrances and impediments which any
executive might put on the free circulation of the
metals of exchange between country and country tend
to exaggerate or accentuate adverse rates, and that
40 First Nine Years of the Bank of England. [I.
1695-6. when William's government or Parliament was trying
to prevent by every effort of police or punishment the
exportation of these metals for the satisfaction of
obligations, they were increasing the financial diflB-
culties of William's military projects^. The fact is,
administrations constantly confound the power which
a government has of giving a factitious value to its
domestic currency, the extent of this power being a
very difficult question to determine, with the inter-
pretation which the commercial world, in so far as it
is out of their jurisdiction or authority, puts upon
the value of their issues. Now among the few men
of science at the time of the recoinage, Locke saw
this clearly 2.
At the beginning of the year 1695, the discount
on English drafts on Amsterdam was i3"7 per cent.
This adverse tendency, never materially changed for
the better, continues up to the end of May, oscillating,
but always disadvantageously, between the rate given
above, the best, and 23*5 per cent, the worst, on
May 31. During June and July, it will be seen that
^ Nothing I believe would be more instructive in tbe inter-
pretation of the struggle between the United. Provinces and
Philip the Second in the sixteenth century, than information on
the rate at which Philip's bills were discounted at Genoa and
elsewhere. Of course I am aware that the Milanese and Franche
Comt6 were part of Philip's dominions, and therefore aided the
machinery of transmission.
^ It must not be imagined that the high rate of discount on
English bills was due to the condition of the English currency.
The bills of course had to be met in coin interpreted as bullion.
If the English coins had been taken by tale at Amsterdam, the
discount would have been a premium, for we are told that the real
value of the coin was little more than half its nominal value.
I.] The Great Experiment. 41
it ranges between 2 5 '4, the most favourable, and 30, 1695-6
the least. ^
During August and the greater part of September
the exchanges were most unfavourable, the lowest
point, as I have stated, having been that of August
16. Between the rate at this date (36'9) and the
highest during the three months, the fluctuations are
9 per cent., the highest being 2 7"9. Then the tide
begins to turn, though a sharp reverse occurs in
November, when the difiiculties of the currency
became serious from the point of view of the foreign
exchanges, though the disadvantage of England is
never quite as great as it was on August 1 6. At the
end of the year, the adverse rate is 20'2 per cent.
During the whole of 1695, the country was suffering
from the scandalous state of the currency. That was
an English, not a foreign interest, as Parliament was
forced to acknowledge. The Amsterdam banker
was not paid in clipped money.
The remedy was the Eecoinage Act, which became tu Re-
law on January 21, 1696, though practically the ''°*""'^^'
principles on which the process would be carried out
were afiirmed on December 10, 1695. ^^^ ^^r the first
seven months of 1696 the adverse condition of the ex-
change oscillated between ip'S, the best, on January
24, and 27*2 per cent., the worst, on July 24. On
July 3 1 EngHsh bills were for a week at a premium of
four per cent., but soon fell again to a discount of 12 "2
to 1 5' 7, and on August 21 they were even at 2 8" 2
discount. Then they rapidly rose. On September
II the discount was only 5"3, at which it kept till
42 First Nine Years of the Bank of England, [i.
1696. October 2, when it was I's. On October 9 it was
"*"" only one per cent., but during the last fortnight of
the month it was between 17 and I7'6. In No-
vember, English bills were at par or at a premium ;
and as an interpretation of current but exceptional
diflSculties, the record ceases to be instructive.
It is a curious illustration of the fact, that the
knowledge and interpretation of the facts and causes
attending a commercial crisis rapidly become obscure
and erroneous, that Justice, in the book from which I
have extracted the key which has enabled me to
understand the situation in the two years 1695 and
1696, though stating that the exchange between
London and Amsterdam was once as low as 27^ and
therefore represented a discount of nearly 38 per
cent, on English bills, ascribes the calamity to the
recoinage. But this adverse state of things occuiTed
between the dissolution of one Parliament and the
sitting of another, when neither the purposes of the
Administration nor the inclination of Parliament
could have been foreseen. It is true that during
the recoinage the exchange was very adverse to
England. But the worst quotation of 1696, and
that only for a short time, is eight and a-half per
cent, better than the worst of 1695.
Tie policy I cauuot but bclicve that this terrible condition of
gaeZd the foreign exchanges must have precipitated the
conclusion at which Montague and Sommers arrived,
that the currency must be reformed at all hazards,
' It is clear that the quotation of Aug. i6, 1695, must have
been remembered long afterwards.
Sommers.
I.] The Great Experiment. 43
and could be reformed only on the condition that 1696.
faith must be rigidly kept with the public and "*""
private creditors. Disastrous as was the condition
of the home trade under such a currency as then
circulated in England, great as the sufferings were
of those who lived by wages, severe as the straits
were of those who lived on fixed incomes, certain
as the shock to credit would be during the trouble
which was imminent, enormous as the gains were of
the goldsmiths and money-changers, many of whom,
like Duncombe, rose from moderate circumstances to
opulence during this crisis, these evils were small
by the fact that the aids granted for carrying on
a war on which wise men believed that the very
existence of England depended were constantly
mulcted to the extent of 30 to 20 per cent, in the
mere process of transmitting credits to the seat of
war. In this crisis the Bank ran its greatest perils,
did some of its best services, and established the
confidence which has made it so famous ^
A new Parliament met on November 22, 1695, and
made the reform of the currency its first business.
This capital measure is contained in 7 William III.
cap. I. As in ordinary collections of the statutes the
Act is omitted, because it expired with the operation
it was passed to effect, I have extracted its par-
ticTilars from the printed copy which was issued
simultaneously with the royal assent by the king's
' No one of course at that time knew, or if he knew had the
courage to say, that the best security against a monetary famine
is free trade in the precious metals, whether coin or bullion.
44 First Nine Years of the Bank of England, [i.
1696. printers. The remedy was almost too late, for the
distress which continued during the first year of its
operations was great indeed. But the restoration of
the currency under William, the process occupying
nearly four years, was as capital a performance
as the restoration of the currency under Elizabeth.
It was, however, incomparably more costly. Ac-
cording to Ending, our highest authority on the
subject, the recoinage was not completed till 1699,
the amount issued from the Mint was about seven
millions, and the cost to the country, in the difference
between the old clipped and the new milled money,
was no less than £2,703,164 5s. \o\d. The loss
was provided for by the house and window tax.
Critidsm Every one knows that the Recoinage Act of 1696
Secoinage was the work of Montaguc, and arduous work it was.
He had to overcome two difficulties. One was the
provision of a charge so enormous for the times as the
loss stated above would be. It is probable that had the
liability been exactly anticipated, instead of being
vaguely conjectured, Montague would have reasoned
in vain. It is possible, if the Bank had foreseen
what straits it would have to go through, in the
depreciation of its stock, in the discount of its notes,
and in the suspension of its dividends, the high-
minded and honourable men who had guided its early
fortunes and given all their energies to its success,
whUe they had been the mainstay of William and
his armies, would not have had the courage to face
the formidable future, especially as they were already
threatened with the opposition of Chamberlain's
I.] The Great Experiment. 45
Land Bank, which if it were successful would cripple 1696.
them, and if it failed might cripple aU credit. Godfrey, "
as I stated above, reckoned the loss of the recoinage
at from one to two millions. But the loss of nearly
three millions at a period when, if there had been no
debt as well as no war, such a sum was nearly equi-
valent to a year and a-halfs ordinary revenue, was as
serious at the end of the seventeenth century as a public
loss of a hundred millions would be at the end of the
nineteenth. Undoubtedly a blessing came out of the
suffering, but when people suffer they are very duU
at discerning blessings. As it was, there can be no
doubt that Montague had the assistance of the
shrewd and far-seeing men who constituted the first
direction of the Bank of England, and whose conduct
during the perils of the next two years made the
Bank the acknowledged and sole centre of English
finance and the type of English public faith.
The other difficulty in Montague's way was
more subtle. The harvest had been unpropitious,
the price of food was high, and there was considerable
distress. Would it not be better to keep the same
names for the crown, the half-crown, the shilling and
the sixpence, but to coin an ounce of silver into
seven shillings instead of five \ There are people
who even now believe that Government can give an
intrinsic value to a coin which it does not possess in
bullion, quite apart from the value which the coin
possesses as an instrument of exchange and trade at
home^. But many more people beheved in this
' I am of course referring to the metal which makes the standard
46 First Nine Years of the Bank of England. [I.
1696. theory in 1695. Parliament had fixed, and would
^ fix again for many a long day, the price of crown
pieces and guineas, of corn and salt, of labour and
of loan capital ; why should it not save the cost of
recoinage by lowering the quantity of silver in the
coin, and stiU calling the coin by its old name %
The author of a Brief Account of the intended
Bank of England, quoted above, saw that there was
a prevalent error, 'that the stamp or denomination
gives or adds to the value of money,' and I make no
doubt that Pater son's colleagues (to him I am con-
fident the pamphlet of 1694 is to be assigned) still
remembered and clung to the sound principles which
the Scottish projector laid down. At the present
crisis Montague found effective help in Locke's
treatise, which is justly praised byMacaulay^
That the expedient of lowering the weight of the
coins while they were still called by the old names,
which was advocated by Lowndes the Secretary to
the Treasury, would have given a shock to the credit
of Grovernment, because itwould have induced distrust
upon all public or parliamentary contracts, cannot I
think be disputed ; and that a lessening in the weight
of the coins would have been a disguised repudiation,
and a simultaneous and undeserved spoliation of all
or even the coin. We take gold as the standard. We might go
farther and take the sovereign as the standard, and issue a half-
sovereign which should be a token only. The answer to Peel's
famous question, What is a pound ? is 1 1 3^-5 grains of pure gold.
^ Chap. xxi. Locke's essay was called ' Further Considerations
concerning raising the value of Money.' It is addressed to Lord
Keeper Sommers.
I.] The Great Experiment. 47
creditors in the interest of all debtors, is equally 1696.
clear. Under these circumstances every powerful "
interest should have been opposed to it. If the
fundholder and mortgagee would lose a portion of
their income, so would the landlord a portion of his
rent, and every one who had a pending contract
would have been similarly and proportionately
mulcted. It was only, I am persuaded, because many
persons believed that the name of a shilling would
carry the fact of a shilling, even though the coin
was clipped by law, that the resolution to keep up
the old standard of weight was carried by eleven
votes only.
On the resumption of cash payments in 1819, it
was again suggested that the standard should be
degraded, in this case under the disguise of ' what
should hereafter be the price of gold.' There were
people, called statesmen, who thought it should be
taken at £4 i^. the ounce; there were others who
thought it should be, as their opinions varied, from
£4 \os. to £5 10^. Now there was something
plausible at the time in the fact, that for some years
before the resumption prices of this kind had existed
for the bank note^ But better counsels prevailed,
and the old standard was restored^. It must surely
* See Tooke's History of Prices, vol. ii. pp. 64 sqq. The
retention of the old standard was the work of Peel. His father,
a shrewd man enough, thought his son almost mad.
^ The argument that much of the debt was contracted in a de-
preciated currency, and that therefore the interest might justly be
paid in a clipped coin, was another plea for public fraud which was
frequently alleged in 18 19.
48 First Nine Years of the Bank of England, [i.
1696. be the case that the precedent of Montague's re-
** coinage and the good faith then kept with creditors
under circumstances of far greater difficulty and loss
was present to and swayed the minds of those who
directed the resumption of cash payments.
The debates in the country, in the Council, and in
Parliament as to the steps by which the currency
was to be reformed, and the motives by which the
Commons were induced to pass 7 William III. cap. i,
are described by Macaulay with such vigour, clearness
and accuracy, that it would be superfluous and im-
pertinent for me to restate the details. I pass to the
Act itself.
Thedetaiis The preamble of the Act says that as the coins
had been diminished by the wicked and pernicious
crime of clipping, the coin is to be restored by a
public charge or contribution. It then provides that
after February i, 1696, the Commissioners of the
Treasury shall tell and weigh all clipped money and
even coins of coarser alloy into the Exchequer, and
while this is going on that aU persons concerned
shall have reasonable access without payment to
the books ; that the origin of the money, whether it
comes from customs or excise or aid, or any other
source, shall be written down and recorded ; that the
clipped money shall be forthwith melted down
(refined, if need be, to the standard) and cast into
ingots, and coined anew under the usual rules in the
Tower. It then provides that a certain charge shaU
be made for coining, beyond the cost of melting and
refining ; that ' it be brought back to the Exchequer,
I.] The Great Experiment. 49
and be there placed to the account of the said branch i696.
of revenue in such and like proportion as the clipped "
money taken from that particular branch or fund
shall bear to the sum of the clipped money, and be
thereon paid out.'
The collectors of revenue are to take clipped
money up to May 4, and even coins of inferior alloy,
provided they include no copper or base metal ; the
Exchequer tellers are to take such money from the
receivers up to June 24, and also loans and pay-
ments payable to them ; these receipts being entered
separately and melted separately. Not less than four
country mints were to be erected.
Undipped hammered moneys are to be punched be-
fore Feb. 10, so that the hole made in them does not
diminish the weight, and are not to be current unless
they are so punched ; and if any of such punched
coins are clipped afterwards, they are not to be
current. The Act is not to extend to undipped six-
pences. Of every hundred pounds troy, forty pounds
is to be coined into shillings, ten pounds into six-
pences. Such was the great Eecoinage Act, to which
additions were made by 7 and 8 William III. cap. 10
and cap. 19, and 8 William III. cap, i and cap. 7,
these latter Acts being chiefly designed to facilitate
the acquisition of bullion.
CHAPTER II.
THE LAND BANK.
1696. The price of Bank stock fell from 107 on Jan. 31,
Chamber- 1696, to 83 on Feb. 14^ In this week the House
^UssT- ^^ Commons had agreed to carry into effect the
porters, project of Chamberlain's Land Bank. Chamberlain
had been an accoucheur, and was living at Essex
Street, Strand, with an oflSce in Lincoln's Inn. He
had written one or two books on medicine, and ac-
cording to Watt had published his scheme in 1695.
After the failure of his project he tried to revive it in
Scotland (Edinburgh, 1700^). Another pamphleteer
was John Briscoe, to whose essay I have already
made allusion. He had behind him Harley and
Foley, the former that sly and timid intriguer
who afterwards became Lord Oxford, the latter
' Luttrell, Feb. 11:' The actions of the Bank of England have
fallen from 107 to 85.'
^ I do not feel quite certain that the Hugh Chamberlain, author
of the Manuale Medioum, is to be identified with the projector
of the Land Bank. If he is, he had been physician in ordinary
to Charles II, and was a Fellow of the Eoyal Society. Still,
Hugh Chamberlain of the Land Bank was summoned in 1692 to
attest the birth of Mary of Modena's second child. He had also
been retained for the event of June 1688, but was absent at
Gravesend ou a similar errand, and arrived too late. See his
'Narrative of the birth of the Prince of Wales,' i.e. the 'Old
Pretender.'
The Land Bank. 5 1
at this time Speaker of the House of Commons^- 1696.
It is not clear to me whether they believed
in him and his project, even when they sup-
ported him. But both were jealous of Montague,
and disliked that creature of Whig Nonconformity,
the Bank of England, though both Hafley and
Foley still professed to be Whigs, and Harley had
been a dissenter.
Chamberlain believed that he could float a pubHc
loan to an amount more than twice that which the
Bank of England had undertaken, on the security of
landed property, make the interest on the loan the
guarantee for the interest payable on the biUs he
phould issue on his company's stock, and at once
lend the money to Government and lend it at 3|-
per cent, to the landowner who pledged his land.
He had some other notions which he sedulously
inculcated, one of the most absurd being that a lease
for a hundred years was worth four times as much
as the fee simple. But where the money was to
come from with which to aid the Government and
to lend on mortgage at 3^ per cent, is not explained.
That any one should have believed in this project
was amazing, but it is more amazing stiU that the
King and his advisers should have staked the success
of a campaign on so monstrous and palpable an
absurdity. Some little explanation may be given
of the former, no defence, not even the defence of
despair, could justify the latter. The youngest clerk
in Grocers' Hall could have informed Councillors of
^ Foley died Nov. 13, 1699.
E 2
5 2 First Nine Years of the Bank of England. [ll.
1696. State and officers of the Exchequer that the Land
Bank would never get beyond a project, as LuttrelP
saw when it was first brought out.
On Monday, February lo, 'the Commons were in
a Committee of the whole House upon ways and
means, for raising two millions in full for his Majesty
this session. Eesolved, that the Bank of England
should not raise it. Then Mr. Neal proposed to raise
it upon the Exchequer' (the form it finally took in
Exchequer Bills), ' but that was rejected ; then a
national land bank was proposed, and to be set up
by subscription ; to which the Committee -agreed, and
ordered that none concerned in the Bank of England
should have anything to do with it^.' The assent to
the Bill, of which I shall give a sketch presently,
was given on April 27.
The fact is, the landed men hated the moneyed
men with a bitterness in which envy, contempt,
pride, and rehgious bigotry were the strongest in-
gredients. They looked on their growing wealth
with envy, on their occupation with scorn, on their
birth with disdain, on their creed and discipline with
intolerant hate. Now in such a frame of mind such
people will believe anything, even such a quack as
Chamberlain was — not the first adventurer who has
imagined himself a financier. Men will constantly
make loans at ruinous rates to carry out their own
projects ; can we wonder at the eagerness with which
they swallowed a project which offered them loans
at easy, at unheard-of easy, rates, and this with the
' June 4, June 6. ^ Luttrell, Feb. 11.
II. J The Land Bank. 53
prospect of ruining the canting puritan usurers of 1696.
Grocers' Hall % But it is time to introduce the "
• doctor's ' advertisements to my readers.
First Adveetisement, October 25, 1695.
(Continued for five weeks.)
' Dr. Hugh Chamberlain (who was the first proposer ciamUr-
of Banks of Credit on Land rents) hath lately revived vertim-
his proposal, which was reported by a Committee of
the House of Commons to be both practicable and
profitable, and is taking subscriptions, and meets
already with so great encouragement from divers of
the nobility, gentry, and merchants, and others, that
he hath almost completed £50,000 per annum, with
which he proposes speedily to begin. The said pro-
posal lends the sum of £8000 on the security of
£150 per annum for 150 years at the yearly interest
of only twenty-five shillings for every £100 to con-
tinue but 100 years, and never return the principal,
or five shillings interest and return the principal by
twenty shillings a year for every £100, or (which is
to the like purpose) the Bank gives 80 years' pur-
chase for a rent-charge of £100 for 100 years.
Though this may seem too much at the present rate
and value of Land and Money, yet such is the con-
trivance of the Bank, that it is equivalent to a new
discovered mine, whose proprietors (to supply the
want of money, to raise the value of land, and to
increase trade for the general good) are willing to
give so large a consideration on so easy terms, and
since the Bank is able and wUling to give it, there
54 First Nine Years of the Bank of England. [ll.
1696. is no reason why any should be unwilling to receive
it. Subscriptions are taken every day at the Doctor's
house in Essex Street, near the Temple, and at
Mr. White's chambers in the New buildings in
Lincoln's Inn, where any person enquiring may
receive further satisfaction.'
Second Advertisement, November 29, 1695.
(Inserted for a fortnight.)
' Whereas Doctor Chamberlain, at his first taking
subscriptions for establishing an office of credit upon
land, did declare that so soon as £50,000 per annum
was subscribed to his undertaking, he would begin
to set the same on foot : Now the said Doctor doth
hereby give notice that the same sum and upwards
being subscribed, he is fixing the constitution of this
undertaking, and will give it all the dispatch which
may consist with the due and mature consideration
of so weighty an affair, and in the mean time, in order
to the speedier expediting of the same, it is desired
that all his said subscribers do bring to and leave
with Mr. Samuel White, agent to the said under-
taking, at his chambers, Number seven, in the new
building in Lincoln's Inn, a true and exact particular
of the lands by them intended to be settled, together
with their values, and further notice shall be speedily
given and a time appointed for all the said sub-
scribers to bring__ in an abstract of their writings
and titles.'
II.] The Land Bank. 55
Third Advertisement. ^696.
M ■
(Inserted for three weeks from December 20, 1695,
then for seven weeks from February 14, 1696, then
for four weeks from April 10.) It will be remem-
bered that on February 10, 1696, the House of
Commons resolved to establish the Land Bank.
'A proposal for the encouragement of monied men,
being an appendix to Dr. Chamberlain's office of
land credit ; whereas there is above £50,000 per
annum in land subscribed to Dr. Chamberlain's pro-
posal for establishing an office of land credit, and
whereas there are also many other freeholders willing
to become subscribers, who for want of money to pay
off their encumbrances and to advance the sum re-
quired to be exchanged into Bills according to the
Doctor's said proposal are incapacitated to receive
the benefit of the same : the Doctor is therefore wUling,
in pursuance of his said proposal, and at the request
and for the benefit of such, as also for the advantage
of monied men (widows, orphans, and others), to
continue to take subscriptions for £50,000 per annum
in land more, and also to take subscriptions at the
same time for money, not exceeding £50,000 in the
whole. Such money to be applied as before, for
discharging the said incumbrances, and for circu-
lating of the BiUs.
'Everyone therefore who deposits £1000 in specie,
will secure an annuity of £350 per annum for four
years successively from the time of his payment of
the said money ; and so pro rata for greater or lesser
56 First Nine Years of the Bank of England. [IT.
1696. sums, which annuity, though a great benefit to the
monied man, and no less a convenience to the land
proprietors, is yet no burden upon the oiEce ; and for
the security of such money, land shall be effectually
charged and obliged by legal settlements, on Trustees,
to the satisfaction of the monied persons, and further
the whole profits arising by the said ofSce shall be
duly subjected to the payment of the said annuities,
which new and further subscriptions are not intended
to interfere with, or in any sort to retard and hinder
the proceeding and perfecting the issuing of credit
upon the £50,000 per annum already subscribed.
' Subscriptions of both sorts are daily taken at
the ofiice. No. 6 in the New building in Lincoln's
Inn.'
It is difficult indeed to decide whether this third
advertisement is the offspring of infatuated stupidity
or of deliberate roguery ; whether the projector
actually believed, apart from the inherent absurdities
of his scheme, that he could pay back a loan of £1000
by four instalments of £350 spread over four years,
after undertaking to lend money on landed estate at
three and a-half per cent., and this without trenching
on the profits of his undertaking ; or whether he
fancied that there were dupes who would trust him
with cash for this collateral undertaking, with which
he might abscond. Three years after this advertise-
ment, under date of March 21, 1699, Luttrell says,
' Dr. Chamberlain, the man-midwife, and sole con-
triver and manager of the land bank, is retired to
Holland, on suspicion of debt.'
II.] The Land Bank. 57
The Act establishing the National Land Bank is 1696.
7 & 8 William III. cap. 31. It received the royal tu'
assent on April 27, and it cannot be doubted that i^^^j"*"^
the first advertisement, which is given above, must "®""* "^'"^"
have been seen by Harley and Foley, as well as by
the country gentlemen, Whigs and Tories alike, who
carried the measure through the House. The fact is,
the scheme which was put forward in 1693, and was
voted by the Hovise of Commons on that occasion to
be practicable and profitable, was literally reproduced
in 1696. That it was modified in debate is true
enough, and one clause in it, which enabled the
Government to issue notes on the Exchequer at a
fixed rate of interest, or, as people said at the time,
turned Chamberlain's proposal into an exchequer
bank, was introduced by Montague. But how
William and his Dutch advisers, who were the
teachers of finance to Europe, could have risked the
campaign of 1696 on this frantic project, is a matter
which I have never been able to understand, and
one which I cannot conceive capable of excuse.
The parts of the Act which deal with the Land
Bank are contained, as in that of two years before
constituting the Bank of England, in a Ways and
Means Bill. The object of the Bill was to raise
beyond the ordinary revenue £2,564,000 by way of
loan, and this Harley, Foley, and Chamberlain under-
took to do. The interest, to be provided at 7 per
cent., was £179,480 annually, and was to be secured
by a special salt tax. Most of the provisions of the
Bill are copied from the Act constituting the Bank
58 First Nme Years of the Bank of England. [II.
1696. of England. Only there seems to have been some
unwillingness to trust the conduct of the undertaking
to Chamberlain, Briscoe, and the mysterious agent in
the New Buildings or Serle's Court, Lincoln's Inn.
The King was empowered under the great seal to
appoint a body of Commissioners to take subscrip-
tions on or before August i, 1696, and voluntary
subscriptions of land. Only no director or pro-
prietor of the Bank of England was to be appointed,
and, under certain circumstances or conditions, letters
patent were to be issued incorporating the sub-
scribers under the name of the Governor and Company
of the National Land Bank. The conditions were
that half the sum must be subscribed before August
I, 1696, and the whole before January i, 1697. In
case the moiety is not subscribed before August i
the letters patent are not to issue, and the Bank is
not to be. If the whole sum is not subscribed by
January i, the subscribers are to have 7 per cent.
on their subscriptions pro rata ; by which I conclude
is meant that the bank might exist if a moiety only
were subscribed. The interest and stocks in the
bank are to go to executors and administrators, and
not to heirs.
Then comes a clause which may have been in-
tended to take the project out of the range of stock-
jobbing operations, or to exclude the moneyed men
from dabbling in it. Every subscriber is at once to
pay a quarter of his subscription, and if he fails
to do so, the subscription is to be forthwith void\
^ There is a similar condition in the Bank Act of 1694.
II.] The Land Bank. 59
The whole of the subscription is to be paid to 1696.
the Exchequer before January i, 1697. If default "
is made the deposit is to be forfeited. Under
pain of forfeiture no person having an interest
in the Bank of England, either as director or pro-
prietor, shall possess stock or hold office in the
National Land Bank, and conversely, with the
same penalty, no director or proprietor of the Land
Bank shall have stock or office in the Bank of
England.
The Land Bank is not to trade with its stock in
buying or selling goods, wares, or merchandise, by
which I presume is meant that they are not to
negotiate bills of exchange or other instruments of
credit ; nor is ' the yearly sum to be charged with
more than the moneys paid into the Exchequer,' by
which I suppose is meant that their issues of bills
are to be limited. As the object of the incorporation
is to lend money on land at low interest, the Bank
shall lend at least £500,000 on land securities at
interest not exceeding three and a-half per cent, if it
be paid quarterly, or four per cent, if it be paid half-
yearly. The loans are to be charged on the lands,
and to be entered in a register. This entry shall
charge the lands, and make the company liable to
an action of debt for the recovery of the advance.
All bills issued by the company shall entitle the
bearer to an action of debt against the company.
The company may sell lands on which interest
for two years is in arrear. The guardian of an
infant may advance half his trust funds to the
6o First Nine Years of the Bank of England. [ll.
1696. company. These are the main provisions of this
famous project.
How total and absolute the collapse of the scheme
was is well known, and has been described by
Macaulay with all his picturesque power. The books
were to be opened at Mercers' Hall, and a,t the
Eoyal Exchange, according to Luttrell, on or before
May 25. On May the 8th, and for four successive
weeks, the following advertisement is published : —
' Notice is hereby given, for a general meeting of
all the Land Subscribers to the office of Land credit
proposed by Doctor Hugh Chamberlain, in order to
the actual and speedy opening and setting on foot
the said undertaking. Such meeting to be held in
the Middle Temple Hall, London, on Tuesday, the
9th day of June next, at 8 of the clock in the fore-
noon,, where to prevent the intrusion of persons un-
concerned, none are to be admitted but such as have
given or sent in the particulars of their contents, and
values of their respective subscribed estates, or such
as shall upon the said day of meeting bring their
said particulars with them, or send them by their
proxy. Dated the 30th of April, 1696, at the office
of the Land Credit, No. 6, in the New Buildings
or Serle's Court in Lincoln's Lm, where Mondays,
Wednesdays, and Fridays, from 6 to 9 in the evening,
attendance is given, to satisfy enquiries concerning
the benefit and practice of the said undertaking.'
Total Luttrell makes no allusion to this meeting, but
failure of
the project, says, Under date of June 11, 'The Land Bank makes
but little progress.' After Harley and Foley had
II-] The Land Bank. 6i
gone through the farce of negotiating with the 1696.
Council of Eegency, the whole thing collapsed, and "
Chamberlain, Briscoe, and Co. disappear from the
English public.
But after the meeting of June 9, Chamberlain
strove to save his scheme by another expedient. On
June 12 he inserted the following advertisement, and
continued it for six weeks more, i.e. to July 24 : — ■
' Whosoever hath old clipped money that cannot be
passed away without loss, may dispose of the same
to much better advantage than elsewhere at the
office of Land Credit, Number 6, in the New Build-
ings in Lincoln's Inn. And there may also be had
at the same place the like advantage for guineas and
plate ; attendance being given daily.'
So ended the great delusion, from the success of
which, wide-spread misery and loss would inevitably
have come. For even in that day, men knew in
general terms that a paper currency can be issued
upon cash, and upon credit, though they did not
fully discern that the credit which can sustain such
a currency must be readily convertible into cash, the
conviction that it can be done serving the purpose of
the conversion being actually effected. But luckily
for the nation, the attempt to create a paper currency
upon debts founded on securities which are only
remotely cash and are not generally negotiable, as
in this case mortgages of real estate, entirely failed.
The King and his advisers were embarrassed, the
landed interest was disappointed, enraged, and pro-
bably thought that what they called ' crying down
62 First Nine Years of the Bank of England. [ll,
1696. the Land Bank' was some financial witchcraft or evil
eye on the part of the moneyed men, which cheated
them of their reasonable hopes. But the country
was saved from bankruptcy. Yet it would be an
error to believe that such an illusion as the Land
Bank, dispelled before it took a practical shape, did
no mischief. Such a project was sure to do harm,
even though the country at large escaped, by its own
good sense, from the projected injury.
The real sufierer was the Bank of England, which
was called on to bear saciifices and undergo the
penalties of other people's folly and perversity, and
to make good as best it could the deficiencies caused
by the statesmen who heedlessly relied on this stupid
and abortive expedient.
The effects The first effect of the scheme was to send the
of Cham- .,„ _
beriain's Bank sharcs down, as 1 have said, irom 107 to 83.
Though shrewd men foresaw the failure of the new
project, it was, in the eyes of many, a rival, and a
dangerous rival, to the existing Bank. Besides, the
new coinage was progressing very slowly, and the want
of money was seriously felt. The clipped money
ceased to be current on May 4^, and the milled money
had not come out to take its place. Hence, on
May 6, there was a run on the Bank, the cash of
which was insufficient for the demand. Sir John
Houblon, who was at once Lord Mayor, Governor of
the Bank, and one of the Lords of the Admiralty, con-
"^ As a matter of fact, since the fourtli of May 1696 was a
Monday, the old coin ceased to he current on May 2. The
advertisement of June 12 (above, p. 61) appears to he illegal.
II.] The Land Bank. 63
trived to reassure the applicants by offering them part 1696.
of their demand, in coin, and by pledging the Bank ''*~
to supply the residue as soon and as fast as the Mint
could supply them. From this statement I conclude
that the Bank had been an active agent in collecting
the old money and depositing it in the Mint. On
May 2 the Lords of the Treasury gave notice that
they would take no subscriptions for the Land Bank
in clipped money, and on May 7 that whatever gold-
smiths' notes were lodged in the Exchequer for money
upon loans, would be returned to the depositors,
unless the money was forthwith supplied in specie.
It seems that the amount which the Bank paid out
during the first week was £15,000 only. On
Wednesday, May 13, the Directors held a general
court of the proprietors, who agreed to put off their
dividend, and to offer to such persons as distrusted
the notes of the Bank the tallies which they them-
selves held of the Government as security for their
loans. Meanwhile the Lords of the Treasury pledged
themselves to pay £60,000 a week in the new
money into the Bank till their whole stock was
recoined.
Some of the goldsmiths in Lombard Street ven-
tured to disobey the law, and paid in clipped money,
the only coins still legally current being, the new
silver, the punched old silver, if of full weight, and
sixpences, in which the ring was not invaded. On May
24, another general court was held, and a proposi-
tion was made that twenty per cent, more of the
original subscription should be called up. But as the
64 First Nine Years of the Bank of England. [II.
1696. Lords of the Treasury were paying or promising to
pay the Bank £25,000 a week, apart from making
them the agents for distributing the new money, the
proprietors did not think it necessary to take the step.
Meanwhile the Lord Mayor and Aldermen accom-
panied the Lords Justices round to the several city
companies, no doubt with a view of getting some aid
in this pressing emergency from them. At the same
time mints were being set up in the country.
■Efforts to -"-^ 't^^^ crisis, the Commissioners of the Land Bank
Xa«d£a«A "^6^6 striving to vary the terms under which their
gmng. contingent charter was granted. They first wished to
pay in clipped money, then in guineas at a price above
the statute ; then they wanted a discount of twenty
per cent, on good money, and were told that they
might have five. On June 5 the Treasury, on behalf
of the King, subscribed £5,000 to the new project,
and as it spread its net in sight of the bird, on the
other hand the Bank of England advanced the
interest on their own bills from 2(1. a day to 3c^.
By June 1 1 the failure of Chamberlain's scheme
was almost manifest, even to statesmen like Harley
and Foley, and the Treasury was forced to have
recourse to the institution which the Land Bank was
striving to supersede, and which it had seriously
damaged.
The Bank of England did not make a fresh call.
It borrowed of its own subscribers, on June 11^,
twenty per cent, of the capital, for six months, at
only six per cent., paid this over to the Treasury, and
1 Luttrell.
II.] The Land Bank. 65
drew on the Bank of Amsterdam to £100,000 more, 1696.
supplying the Government with £340,000 at once. ~"
It may be stated that they repaid these sums to their
shareholders, and were reproached with doing so.
Meanwhile the new coinage was progressing more The new
rapidly. By the end of June the Mint in the Tower '""'"''■^^'
was coining at the rate of £80,000 a week^. But the
Treasury continued its solemn negotiations with the
Land Bank, oflfering to abate £300,000 if they could
only find the two and a-half millions ^. So the Land
Bank made a final effort, offering to take plate and
clipped money at 6s. 3cZ. an oz., and the notes of its
rival by way of subscriptions. Unfortunately, the
Treasury postponed a payment of £80,000 to the Bank
of England, and thus, despite the services which the
Bank had done to the Government, discredited them,
by keeping them short of what they needed for their
current payments and for what was their due. It
may be added that the Council of the regency sat
pondering over the difficulty for days together in
the last fortnight of June. Apparently, beyond their
negotiations with Harley and Foley, the chief ex-
pedient of the Eegency was to attract plate and
clipped money, for which they offered 5s. 8cZ. an
ounce and six per cent, interest. It was early in July
that the Government, at Montague's instance, and
^ According to Rudiug, the amount of money coined from
the accession of Elizabeth to the recoinage was — silver,
£20,355,651 7s. i>\d., gold £14,669,949 OS. 9f/. The recoinage
was — silver £7,014,047 i6s. ifd., gold £2,975,550 i6s. \\d.
^ The negotiations are to be found in detail in the House of
Commons Journal.
66 First Nine Years of the Bank of England, [ii.
1696. in pursuance of the clause which, he had inserted in
the Ways and Means Act of the past session, fitted
up an office in the Exchequer for the issue of Ex-
chequer bills, to supply the lack of currency. By
this time about a million in new money had been
coined.
Macaulay teUs us, on the authority of the Dutch
Envoy, that the goldsmiths attempted to ruin the
Bank by a run on May 4. This is probably that
which I have referred to above, as a panic appeased
by Houblon's promises ; that the two narratives of
Luttrell and the Envoy refer to the same event ; and
that the refusal of the Bank to honour malicious
demands is an historical fact, as well as the re-
assurance of the governor is. At any rate, the Lords
of the Treasury at last came to the rescue of public
credit and common sense on July 13, by issuing an
order that no public notary should enter a protest
upon any bill of the Bank of England for fourteen
days. In those days the protesting of a com-
mercial bill could only be effective when drawn up
by one of these functionaries.
Heaciion. This order, or perhaps returning confidence, had its
effect on the credit of the Bank of England. During
the second week of July, according to Luttrell,
under date of July 1 6, ' the bills of the Bank of Eng-
land were at sixteen per cent, discount, but are now
at eight, and 'tis thought in the few days that they
will be taken in current payment (i.e. at par). Mean-
while the Bank offered six per cent, on any deposit
of £50 or upwards in gold or new silver, such
II.] The Land Bank. 67
money to be at call.' According to my other 1696.
authority, Houghton, this desirable result of the note ~"
being at par did not occur till September 17, 1697,
when a dividend, suspended for two years, of rather
more than twenty per cent, was declared. The amount
of clipped money paid into the Exchequer between
January 17 and June 24, 1696, was £4,706,003
1 8s. 6|(£. nominal value.
Under date of July 23 I find the entry of \hQ The first
first Exchequer bills, and I presume that Luttrell buu.
copied them from a specimen which he saw. ' No.
411. Exchequer, July 18, 1696. By virtue of an
Act of Parliament passed in the 8th of his Majesty's
reign, this bill entitles the bearer to £10, with
interest at the rate of 3(i. per diem, payable at the
receipt of the Exchequer on demand. Entered, John
Howard.' These bills were from the very first taken
in payment of taxes, and we hear that they were
very acceptable to persons in the public service, and
were issued down to sums of £5. On July 28 Bank
biUs were at a discount of ten per cent., and the King
got the promise of an advance of £500,000 from the
Dutch Government and others, under conditions of
guaranty. Some considerable City men promised
their personal security for the advance. They chiefly
belonged to the Tory party ^. On August i the
Land Bank, under the Act which erected it, came
^ The negotiation and the promise,we are told, broke down.
Among the guarantors were Godolphin, Sir Stephen Fox, Sir
Josiah Child, Sir Stephen Evans, Sir Joseph Heron, Sir John
Banks, Charles Duncombe, Henry Guy, and Peter Floyer Luttrell.
F 2
68 First Nine Years of the Bank of England, pi.
1696. to an end. Macaulay says that the whole public
*^ subscription was £2,100. On August 15 the Bank,
at Portland's^ urgent instance, lent the King another
£200,000. This was the sum, the grant of which
is described by Macaulay. He does not seem to
have noticed the assistance which they gave on June
1 1 . Mints were now in work at York, Exeter,
Bristol, Chester, and Norwich.
Shortly after the final collapse of the Land Bank,
an anonymous pamphlet appeared, entitled 'Eemarks
on the proceedings of the Commissioners for putting
into execution an Act passed last Session for estab-
lishing a Land Bank.' The writer is evidently still
unconvinced by the ill-success of his experiment.
Thede- He begins by arguino; that traders are naturally
Land hostile to the interests of landed men, because had
the Land Bank succeeded, interest would soon have
fallen to three per cent., and that therefore they cried
down the Land Bank, and defamed successfully what
might have been a most valuable institution. Besides,
an Exchequer Bank was invented against the Land
Bank, with a power of issue, this power having been
exercised while the books at Mercers' Hall were still
open for subscription. Another difiiculty in the
way of the project was that the Act required that
£1,282,000 should be subscribed and in part paid
before the subscribers could become a corporation.
Besides, it was argued that the creation of the Land
Bank was an act of bad faith, after the Bank of
England had been instituted on a loan. To this
' Portland was a large subscriber of Bank stock.
II.] TJie Land Bank. 69
there is the sufficient answer, that under the Act of 1696.
1 694 the Bank of England had no monopoly of issue
or of banking.
The rest of the pamphlet, though vindictive, is
contemporary criticism on the manner in which the
Bank carried on its business. ' The Bank of England,'
says the writer, ' lent their own money, and every-
body's else they could lay hands on. And here it
will be said by the Directors of the Bank, that
although the consequence of the Toleration will be
the setting up of as many churches as there are
different opinions among mankind, yet the directors
of the Church of England put all other Churches
under contribution, and receive tithes from all, like
the City Council, who must be feed though you make
use of others.' It is very possible that some of the
City nonconformists may have used this simile, half
in jest. But the passage is very suggestive.
' The Bank of England strained so hard as to
bankrupt themselves, rather than the Land Bank
should rise ;' a charge which seems to mean that the
Bank had put itself deliberately into difficulties in
order to neutralise the honest purposes of Chamberlain,
and to disappoint the reasonable hopes of the landed
men. The writer evidently thinks that the Bank of
England was bound to issue no more notes than their
capital of £1,200,000 amounted to, a charge which is
probably evidence that they issued notes not only on.
their paid-up capital, but on their liabilities to their
customers. ' They lent,' he says, ' £200,000 to the
king,' alluding to the transaction of August 1 5, when
70 First Nine Years of tJu Bank of England. [ll.
1696. they paid but five per cent, of their debts. ' They
have lent other people's money, not their own. What
they have already called in for, they pay six per cent,
on to themselves, though they deny it to their
creditors.' This refers to the transaction of June 1 1 .
' It is not to be imagined that any one will lend
upon land at the usual interest,' by which he means
Chamberlain's proffer of three per cent., ' when he
can have it on demand with four and a-half per cent,
running interest,' referring to the rate of 'x,(L. a day
for Bank bills and Exchequer bills. 'There were
only two ways in which the Bank of England could
have raised the deficiency. They must either have
issued bills on their own credit, or by opening their
books for new subscriptions. But as their original
sixty was then valued at ninety, it might have
been stock-jobbed up to 150.' The writer con-
cludes with the allusion to the goldsmiths quoted
above. I think it not impossible that the gold-
smiths might have encouraged the promoters of the
Land Bank, with the view of ruining the credit of the
Bank of England, but without the slightest intention
of assisting the scheme they patronised by subscrib-
ing to it. This, I think, is the interpretation to be
given to the sudden withdrawal by Duncombe of
£80,000 from the Bank of England. He was the
most conspicuous and, as events proved, the most un-
scrupulous among the goldsmiths, and was, during its
diflSculties, the most bitter enemy the Bank had. It
was a long time before the Aldermen would allow
him to be Lord Mayor, though he offered bribes to
n.] The Land Bank. 71
the citizens on a gigantic scale. He very much 1696.
increased his wealth during the time of the recoinage, ""*"
how, the public guessed, and Parliament soon knew.
The crisis was now almost over, though it was not
till the Peace of Eyswick was signed that the price
of Bank stock rose to anything like the rate at
which it stood before Chamberlain's scheme was
accepted by the legislature. It was almost simul-
taneously with the signature of the Peace that the
Bank declared its dividend of twenty per cent. odd.
Some of the trouble which the Bank underwent, Some
1 • 1 ■ 1 T • trouble
trouble which continued to depress its paper even camed, ly
after the recoinage was practically effected, was action.
plainly its excessive use of the financial system
which it originated and developed, the rule for
working which had not yet obtained solidity from
the inductions of experienced Paterson and his
associates saw that there was not and could not be
a subsidiary currency which was not assured on a
basis of the precious metals. They saw that it was
possible to circulate such a paper currency, and this to
an amount which was considerably in excess of the
specie on which it was at any moment actually sup-
ported, in other words that it is possible and expedient
to circulate bills, payable on demand, without its being
necessary to assume that the demand for payment
' One must not forget that, to commercial men, the chance of
diminishing the charge on the exchanges would have induced a
feeling of comparative indifference to a moderate depreciation of
paper issues. The success of the former object was vital, the
latter risk could be met by raising the rate of interest on deposits
or on bills put into circulation by the Bank.
72 First Nine Years of the Bank of England, [ir.
1696. would become an immediate claim, and that this
~^ suspended liability might be made an addition to
the currency, and a source of profit to those whose
credit enabled them to issue and float it. But they
were very much in the dark as to the amount which
they could put into circulation, and they naturally
erred on the side of excess. A search into the early
ledgers of the Bank of England, if they still exist,
and are preserved, as their earliest minutes are, might
reveal the actual amount of Bank notes and bills
in circulation in 1696 and 1697, together with
the cash in hand, and give fuller information
than a statement, which I shall presently refer
to, does. But the indirect evidence of contemporary
literature, the evidence from the price of the stock,
and the still more striking contrast between pay-
ments in money and payments in paper during the
first eight months of 1697 ^' ^^® sufficient to prove
that paper money in bills and notes had been issued
and was in circulation to a larger extent than the
amount of specie in the Bank's till or cellars would
justify^. These bills, it will be remembered, bore
interest at from 2(1. to 3cZ. a day, and we have it
in evidence that they were looked on, not only as
currency, but as an investment. I do not indeed
think it could be said that, if the Bank had restricted
its issues by rules like those which were afterwards
' These will be given in the Appendix.
" Anthony Hammond, for several years Member for Huntingdon,
and a Whig, states in his papers that twenty millions of specie
ought to float eighty millions of notes. He lived through this
period, and long beyond the time of which I am writing.
II.] The Land Bank. 73
incorporated into the Act of 1844, it -would have 1696.
avoided the depreciation of its bills during the re-
coinage, unless these issues had been so contracted
as to have almost extinguished the new paper cur-
rency altogether, but I am quite clear that much of
the depreciation was due to an excessive issue, and
this at a time when the legislature was about to
confer or had conferred on the Company the exclusive
privilege of joint-stock banking, and the Bank had
become in many particulars what the Exchequer had
been, even during the time of which I am writing.
The condition of the Bank and the character oiAfro-
prietor's
the crisis through which it was passing is illustrated criticism
1 111 IT ITll."!/^^^ *^^""
by a remarkable anonymous pamphlet, pubhshed vnaUonin
the year 1697, and professing to be written by Si^Banicwas
member of this corporation or company. It was
almost certainly written at the end of 1696. The
writer begins by comparing the position of a private
banker with that of a public and national institu-
tion i- He observes that no person believes that
such a private banker has by him at any given
time all the cash on which the notes or bills
which he circulates are based ; for a moment's
reflection will point out that he could not defray
the expenses of his establishment if he did not
use his customers' money. He then quotes the
^ I am here condensing the writer's statements and reasonings.
The title of the pamphlet is, ' A Letter to a Friend concerning the
credit of the Nation, and with relation to the present Bank of
England, as now established by Act of Parliament. "Written by a
member of the said Corporation for the public good of the King-
dom.' 1697.
74 First Nine Years of the Bank of England. [II-
1696. case of a private banker in Lombard Street, whose
" liabilities to bis several customers amounted to
£1,100,000, which no man imagined he had at a
given time, not even a twentieth part of it, but
whose credit was so high, the confidence in his
judgement and integrity being so general, that as
his notes or biUs were presented to him for payment
other customers paid their cash into his bank.
And on the contrary, if the banker is suspected of
carelessness or recklessness, of putting money into
hazardous ventures, or into remote and doubtful
funds, his credit soon becomes impaired, the con-
fidence of his customers, which is the life of his
business, lessens, the deposits hitherto left with him
are soon withdrawn, and his paper is suspected or
refused.
Now precisely the same conditions induce the
credit or discredit of a public or national institution.
Its fund must be inviolable, and neither king nor
parliament should tamper with it. Its management
must be in the hands of men whose reputation is
good, whose estate is ample, and whose prudence
is assured. The security of the bank must be as
complete as the security of a mortgage, and should
be as sacred. This is illustrated by loans which have
been made on what have afterwards proved to be
insuflBcient funds, and whose creditors have therefore
to wait for their interest. In such cases, in order to
preserve the reputation of the exchequer, it is above
all things essential that the deficiency should be made
good as soon as possible from the first funds in hand.
II.] The Land Bank. 75
Now what is tbe state of things at present % The i696.
gold and silver of the country is, by a stroke as it "
were, reduced to one-half of what it had been, when
the light and clipped money was taken by tale, and
this apart from the present void made by the re-
coinage. In the interval ' all that which is commonly
called paper credit is sunk, lost, and become useless
in trade and public dealings. With that paper credit,
that is with goldsmiths' and bank notes, which
amounted to near as much as aU our current coin,
the greatest part of the trade in and about this city of
London was formerly driven \ all foreign and inland
bills of exchange and all great payments were made in
these notes, and very seldom any considerable sum was
paid or received in money. Whilst these notes con-
tinued in esteem and par with money, they answered
all the ends and uses of money in trade, and money
was only needful in the markets, and for smaller
payments, for which purpose a small quantity of it
was sufficient. Hence nothing but a long-continued
peace, and a well-managed foreign trade, can restore
that treasure this war hath drained from us, and
especially the damage which the French have done
us, which is at least computed to be twelve millions
sterling^.'
But the question is, how can this credit be restored 1
Only, the writer infers, by the Bank of England, and
by the grant of those privileges and encouragements
^ The writer refers to the losses which British commerce had
suffered from French privateers, to check which was the motive for
Talmash's expedition to Brest.
76 First Nine Years of the Bank of England. [II.
1696. which would be of no injury to the pubhc. In the
" first place, no forcible or compulsory expedient will
succeed, for men will not trust their cash except for
natural reasons. Then the funds on which loans
are made, notes and biUs are issued, must be de-
monstrably safe, sacred, sufficient, and regularly
paid. Then the Bank must be the single pubhc
institution of the kind. Competition in this case
will inevitably cause distrust, and distrust will
contract instead of enlarging credit. We do not
propose that people should be forced to deposit
their cash with the Bank, but we wish to make it
the interest and convenience of moneyd men to use
it. The Bank of England, to be useful to the State,
must be the general cashier to all such persons in
or about the city of London. This policy has given
their strength and public utility to the Banks of
Venice, Amsterdam, and Hamburg. Now rivalry in
public institutions of the kind will frustrate the
main end of banking, * which is to furnish the king-
dom with an imaginary coin to serve the uses of
that which is really so.' By conferring then on the
Bank this privilege, which it must use for the benefit
of the public, ' according to that observation of the
late excellent and never to be forgotten Deputy
Governor, Mr. Michael Godfrey, we are under these
happy circumstances, that we cannot do good to
ourselves, but by doing good to others.'
Another condition is that the several sums paid to
the account of the Exchequer should pass through
the Bank ; in other words, that the Bank of England
II.] The Land Bank. 77
should be the banker of the Government. It is true i696.
the proceeds of the taxes will not remain long with '^
it, but they will constantly flow through it, and
what is taken out by an order of the Treasury will
be replaced by a Treasury deposit. It is impossible
to discover any public injury in this expedient, and
the fact that some private persons derive benefit
from the use of these balances ought not to stand
in the way of the public good. And, says the writer,
' I know no man and no number of men who have
so well deserved of his Majesty and the Kingdom
as the Bank of England has.' It is necessary again
to extend the duration of its charter, to make all
foreign bills payable at the Bank, or at least de-
manded there before they can be protested. Further-
more, the notes and bills should be protected by the
enactment of severe penalties against forgery, and
the credit of the Bank should be further supported
by inflicting adequate punishments on officers or
receivers of the revenue who delay or obstruct pay-
ments into the Bank, for which the Government has
pledged its word as to time and amount.
If these privileges were granted, the Bank would
immediately and infallibly resume its former credit
and its former "usefulness; without them, the public
credit will be suspended for an indefinite time.
' We have,' says the writer, ' a mighty engine to
move, and but very little water to move it with;
and if the little water we have be divided into
different channels and not united, as far as possible,
into one, it can never stir the engine, which is our
78 First Nine Years of the Bank of England. [ll.
1696. trade, and if that be stopped, or stand still, every
one may guess what the immediate consequence will
be.' 'Till credit be restored, high interest will
continue, for it will be impossible by any laws to
hinder men from lending or borrowing money above
or below the natural interest. If I want money,
I shall find out ways to give ten per cent, interest,
when I cannot have it for less, although the law
forbids men to take more than six per cent.' But
such a necessity will ruin trade. ' He that trades
with money which he has borrowed at ten per cent,
cannot hold market with him that borrows his
money at four^.'
It is indeed proposed that the stock of the Bank
should be increased (or, in the language of the time,
be engrafted on) : 'but this will prejudice the present
proprietors of stock, because the general credit of
the Bank will suffer as follows : i . It will lose its
specie, for this wiU be drawn out to purchase the
new stock; 2. The million of sealed bills, for the
payment of the eight per cent, on which there are
at present no funds, owing to the present relations
of the Bank to the Government, will be speedily
demanded from the corporation ; 3. If distrust arises,
as may well be expected. Bank bills and notes will be
exchanged at still higher rates of discount, and credit
will be still more seriously impaired. It is besides
neither just nor wise to force a new stock on the
^ My readers will see from the facts given lower down that
this pamphlet, though published in 1697, must have been written
in 1696.
n.] The Land Bank. 79
Bank ; not just, because the present managers and 1696.
proprietors of the Bank are entitled to the advan- **~
tages, whatever they may be, of their own forethought
and success ; not wise, for the future of the State's
credit depends on the fidelity with which it adheres
to its past engagements. Pressure has been put on
the Bank, and threats held out that our privileges
will be extinguished. To these threats some of the
proprietors were willing to yield. But with what
result \ We have suspended our dividend in the
interest of the Government, and to help it during
its difficulties and ours, the latter not of our own
making. If we are forced to abandon the Bank, and
the service it does the public, we shall still have the
eight per cent, on our capital fund, and the twenty
per cent, on what we have subscribed, and is actually
our own in undivided profits, which, though not at
present available, is a genuine asset. But the failure
of our Bank will be, for many a long year, a fatal
discouragement to any similar project.'
The writer then proceeds to complain of the supine-
ness which the Governor and Directors have shown in
not bringing these facts before Parliament, and 'the
services and sufferings of the Bank for the nation's
benefit and tranquillity.' One would have thought
that ' they would have been seen daily in the Lobby,
and in the Court of Bequests, soliciting the honour-
able House of Commons in that behalf, proving to
every Member the reasonableness of their desires, and
the justice of their case ; that the many aspersions and
calumnies that are cast on them are all false, malicious
8o First Nine Years of the Bank of England. [ll.
1696. and groundless.' They ought to take example ' from
the Committees of the East Indian and African Com-
panies, who are indefatigable in a very bad cause,
while the Bank directors are remiss and backward
to seek for relief in a very good one;' and should
recall to their minds ' that their late worthy Deputy
Governour showed them a better example ; he never
knew anything proposed to the prejudice of the
Bank, but he laboured night and day to prevent it,
and sat not idle under desponding thoughts, that his
endeavours would be vain and fruitless, but in imi-
tation of a great Philosopher, who said, He was not
born merely to serve himself, but for others, so I wish
these or any other considerations had roused them up
to imitate so brave a pattern and example of general
good for their country's service.'
He then comments on the fact, that while the first
twenty-six directors were well chosen, yet ' some of
them treat their oflSce as a sinecure, since in two
years' time, for want of exercising a prudent conduct
in their trust, they have too apparently ruined not
only in great measure the general credit the Bank
had, to the infinite prejudice of trades, but the present
adventurers ; and 'tis too much to be feared, that the
project of engrafting five millions sterling on the
original capital, will be disastrous to the old cor-
poration, and fail to attract new subscriptions.'
The writer concludes : ' I have, for my true regard
in serving the Government, lost a very considerable
estate by my stock in the Bank of England, which is
a very great part of my fortune, and my family will
II.] The Land Bank. 8i
feel the effects of it hereafter. But as the race is 1696.
neither to the swift, nor the battle to the strong, so I
submit all to the wise guidance of Providence.' It
is to be hoped that this writer, who so carefuUy de-
scribes and so usefully illustrates the terrible trouble
through which the Bank was passing, held on to his
stock, and reaped the benefit of those better times
which were at hand. Probably the directors of whom
he complains found in the private assurances of Mon-
tague more hope than they could have derived from
intriguing in the Lobby and the Court of Bequests.
The arguments contained in the pamphlet on
which I have just commented are reiterated and
amplified in another, entitled ' The Arguments and
Beasons for and against engrafting upon the Bank of
England tallies, &c., as they were debated in a late
general court of the said Bank, considered in a letter
to a friend.' My copy has no date, but it is clear
from internal evidence that the statement was written
and printed very early in the year 16971.
^ On December 4, 1696, the Governor and Company
of the Bank of England attended by order of the
^ Some persons, members of the Government and others probably
anxious to damage the Bank, had pressed on the General Court the
prudence and even the necessity, unless the Bank were willing to see
its business curtailed or extinguished, of acquiescing in the increase
of the stock to an enormous amount, chiefly by taking up the
Exchequer tallies. Some of the Proprietors appeared willing to
yield. I suspect, however, that several of the Directors knew that
other counsels had been adopted. The meeting appears to have
been held on January 2. Luttrell.
^ Journals of the House of Commons. The balance-sheet is
printed in the votes of the day.
G
82 First Nine Years of the Bank of England, [ii.
1696. House of Commons and presented two papers, one
^~" a debtor and creditor account of the Bank, the other
a list of talhes on the Parliamentary funds which
were in their possession.
De.
Ce.
s. d.
To sundry per-
By tallies on
sons, for
Parliamen-
sealed Bank
tary Funds,
Bills . .
893,800
as by list an-
To ditto due
nexed, with
on Notes for
interest . 1,784,576
16 5
running cash
764,196
10
6
Half-a-year's
Monies bor-
deficiency of
'
rowed in
the fund of
Holland
300,000
I oo,oooZ.
Interest due on
per ann. in
Bank BiUs
second year 50,000
standing out
17.876
Mortgages,
Balance .
125,315
2
1 1
pawns,
other secu-
rities, and
cash . . . 266,610
17
£2
,101,187
1.3
_5
£2,101,187
13 5
Upon this, on December 5th, a Committee of fourteen,
with a quorum of five, was appointed to inspect
the books of the Bank of England, and on December
10th Sir John Bolles reported. As to the second
item on the debtor side, £66,669 6s. 2d. was for
what are called Specie Notes, which carried interest,
if of £20 and upwards, at the rate of six per cent.,
about one-third of these notes being under £20,
and the residue was issued by notes which bore no
interest. As for the Dutch debt, the Dutch Am-
bassador had tallies in his custody as a security.
They reported as to the correctness of the credit side.
II.] The Land Bank. '&i
The cash held by the Bank was only £35,664 is. \od. 1696.
in money and £9,636 14s. id. in goldsmiths' notes. "
Between the date of this information given to the TU assets
House of Commons and the 3rd of January, iGg'j, Bank.
when the Court of Proprietors assembled to take
into consideration the project of engrafting fresh stock
on the present capital of the Bank, the directors had
been pressed to accede to the scheme and threatened
with the loss of their privileges if they did not. From
the pamphlet just referred to we learn that, notwith-
standing the depreciation of notes and bills, ' the
transfers from one account to another in the Bank
books amounted to £300,000 a week ; that the depre-
ciation amounted to 1 6 or 1 7 per cent.; that in August
they had lent (the King) £200,000, when they could
not pay their debts, much less pay dividend, they
having resolved to postpone their dividend tiU their
notes were at par; that the debt to the Dutch was
borrowed at five per cent., and when the tallies come
to maturity, if they are duly honoured, that they will
be able, within six or seven months, to reduce their
debt to £500,000, a sum which cannot make a diffi-
culty to them, since they can circulate sealed bills up
to the amount of their capital, £1,200,000, and it is
probable that the Bank will continue to issue these
sealed biUs tUl the time comes when they will be able to
fully satisfy every person who has a demand on them.'
The privileges which the Bank demands iu order
that it may recover its credit, are the same as
those suggested in the pamphlet last referred to.
But the writer comments on the fact that when the
u 2
84 First Nine Years of the Bank of England, [il.
1696. Bank began to work, talKes which had been at 2 5 to 30
per cent, discount rose to par, and that consequently
the Treasury made so much the better purchase
for stores ; that the goldsmiths used to charge 1 2 to
14 per cent, for discounting foreign bills, which the
Bank did for three ; but that if the capital of the
Bank were enormously extended, no profit could be
made on a sum which would be far in excess of the
public wants in ordinary times.
Tie causes The two pamphlets to which I have referred give
of the
crisis. a vivid picture of the distress of the Grovernment, of
the urgency of the situation, and of the dismay felt by
the shareholders of the Bank. The Government had
borrowed from them every shilling they could spare,
had induced them to pledge their credit in Holland,
had made them the agents for collecting the chpped
money for the recoinage, had promised to furnish them
with monthly payments of cash, had broken their
promise, and Parliament had threatened them with
a rival in the Land Bank. When this mischievous
scheme had totally failed^, they had again assisted
the Exchequer with their money and their credit,
and now an attempt was being made to swamp their
* According to the Journals of the House of Commons, £1600 only
was subscribed by the public by June gih, £500 more by June 19th,
and no more between that and August ist. It should be added that
the project of the Land Bank was not the act of the Administration.
But during this period and for years afterwards Ministers who were
in a minority in the House clung to office, and were therefore con-
stantly constrained to carry into execution acts which they had
personally repudiated. The doctrine that a Government cannot
remain in office if it be put into a minority in the House of Commons
did not become an invariable rule till long after these times.
n.] The Land Bank. 85
stock with an enormous addition to their capital, the 1696.
stock to be provided out of depreciated tallies. No ~*'~
marvel that the proprietors were aghast at the pro-
posal, and, loyal as they were to the Eevolution and
the King, that they flatly refused to acquiesce in a
project which their experience convinced them would
lead to an inevitable collapse, and to certain ruin.
I am persuaded that nothing but the courage and
firmness of the directors saved the institution during
this terrible crisis. They had to meet importunate
creditors, disappointed shareholders, and a needy and
desperate Administration. There was one thing to
help them in their resolution. Petitions came pour-
ing into Parliament, praying the House to devise
some means by which credit could be restored to the
paper currency, and alleging that this expedient only
could save the internal trade of the country from
collapse. The directors therefore did weU to be
resolute, to refuse to be the instruments of their own
destruction, and to demand that, pending the restora-
tion of credit, the Government should concede that
which they required, and leave them to work through
the diflficulty in their own way^.
The situation is further illustrated by the fact
that the discount of Bank biUs and the depreciation
of Bank stock were greater in 1697, when rivalry was
extinguished, than they were when rivalry was not
only possible, but actual. And in saying this, I take
into account the issue of Montague's Exchequer bills,
'^ Luttrell gives a good deal of information as to the pressure
put on the Bank by Parliament during the early part of 1697.
86 First Nine Years of the Bank of England. [II.
•1696. the popularity of which was I think due to the fact
" that they were more easily negotiable, and were less
liable to discount than those Exchequer tallies in
which the Government was in the habit of meeting
its obligations and anticipating its revenues. But
for all that, these bUls must have been to a consider-
able extent the rivals of the Bank paper, and unless
the issues of the latter were contracted, must have
tended to accentuate the depreciation. But the
rivalry of these bills must have been more than
counterbalanced by the sole privilege which was soon
after conferred on the Bank.
Joinu The effect of joint-stock rivalry at this time, or
rivalry rather a little later, is curiously illustrated from the
ly the stocks of the old and new or English East India
c^- " *" Companies. The stock of the old East India Com-
pames. pany, which had stood at 158 at the beginning of
1692, had sunk in 1697 '^o 38, the lowest point it
ever touched, except in July 1698. Of course East
India Stock was more liable to fluctuations than any
other, for it was exposed to the risks of war, when
the country was at war, and to tempests always.
Beyond doubt the value of the security was greatly
lowered by the revelations made in the early part of
1695, when Gruy, Craggs, and Trevor were punished,
and Seymour and Leeds were justly suspected to have
been bribed with them by the Governor of the Com-
pany. The old Company was essentially a Tory corpo-
ration, and money had been lavishly spent in securing
the protection of Parliament, by distributing much
cash among influential members of both Houses. Now
II.] The Land Bank. 87
in 1698, Montague determined at once to supply i696.
the Crown -with a new source of revenue, and to *^
secure for the Whigs of the City a new fortress, in
the foundation of the English East India Company.
On July 5, the Act, constituting the general Com-
pany, became law, and the stock of the old Company
fell to 33^. I am not discussing the fortunes of
these Companies, but I may add that in September
1703, when the stock of the old Company was at
134, that of the new had risen to 219. I refer to
the particulars of the case to show how seriously in
that time the price of a public stock was affected by
the prospect of rivalry.
Now LuttreU notices very fully what this discount Tiie dh-
of Bank bUls was. Under his dates, in 1696, th.e'BmMiiis.
Exchequer bills were issued on July 23. On July
28 the discount on Bank bills was ten per cent. ;
on August 25, when the Bank was negotiating the
terms on which it would assist the Government, on
which I shall comment, it was at 15; on September
12, at from 16 to 17; on October 10, at 20. On
October 22 the discount fell to 12, but by this time
the policy of the Government, to make the Bank of
England the sole Bank, was anticipated, a purpose
affirmed by Parliament on November 1 1 . But with all
this, on December 26 the discount was more than 17.
At the end of the year the Bank was debating the
question as to what assistance they could give the
Government, the House of Commons having proposed
that they should lend two-and-a-half millions, on the
security of that Salt Tax which was to be pledged to
88 First Nine Years of the Bank of England.
1697. the Land Bank. On January 5tli, 1697, ^^® Bank
^ declared that, owing to the scarcity of money, they
could not pledge themselves to so large a loan, but that
they were willing to enlarge their stock, upon terms
which at first the Commons were indisposed to grant,
hut to which the House yielded on January 14th. On
January 1 6th, 1 697, the new subscription was made, in
bills and tallies, and amounted to £1,001,171 \os}
On January 30, the discount was 1 9 per cent. ; on
February 18, 21 per cent. ; on February 20, 24 per
cent.; on March 23, 2 3-g- per cent.; on May 20, 18
per cent. ; during the first three weeks of June, 1 3
per cent. ; during the last week, 16 per cent. Be-
tween July 24 and September 20, it sinks gradually
from ten to one per cent. Of course the dividend of
August 28 had much to do with restored confidence, as
had also the Peace of Ryswick (September 20, 1697).
These enormous rates of discount on Bank bills, bearing
4^ per cent, interest, with the certainty that large
profits were being made in the Bank's business, and
that there was the prospect of a considerable dividend,
and taking into account that Parliament had granted
the sole privilege of joint-stock banking to the Bank
of England, prove to me that the discount was greatly
due to over-issues of paper money. The excess of
issue may have been excusable, even necessary, but
it seems to me to be ob\dous.
^ This is almost exactly the difference between the original
capital and the liabilities on December 4, 1696. I have no doubt
that the original or existing proprietors subscribed the whole
amount.
CHAPTEE III.
The Second Bank Act.
The enemies of the Bank of England were discom- 1697.
fited or silenced by the failure of their own project, and Provisions
were clearly convinced that it was useless to resist second
the determination of the Government to support the
credit of the Corporation. The Act for enlarging
the capital stock of the Bank is 8 & 9 William III.
cap. 20. The principal provisions of this Act are,
that on or before June 24, 1697, '^^® common capital
and principal stock of the Governor and Company
shall be computed and estimated by the principal
and interest owing to them by the King, and by each
or any other effects whereof the said capital stock
shall then reaUy consist over and above the value of
the debts which they shall owe at the same time
for the principal and interest to any other person
or persons whatsoever.' This provision appears to
imply that there shall be an audit of the Company's
assets, and that this should be assured to the original
proprietors. The new subscribers are to be repre-
sented on the Court. By August 24, the value of
the capital is to be made up to £1,200,000, and if it is
found to exceed that amount, the excess shall be
divided among the existing proprietors.
90 First Nine Years of the Bank of England, [ill.
1697. Next the capital is to be enlarged. Then the legal
duration of the Bank is to be August i, 1710, at
■which date the debt might be paid oflP; and a year
afterwards, if this expedient be adopted, the corpora-
tion's charter is to cease. No other corporation of
more than six persons is to be allowed to set up a
bank. The Bank is permitted to borrow beyond
£1,200,000, but bills issued in excess of this amount
are to be expressed and distinguished. It was made
felony to forge Bank bills. The Exchequer bills
granted by the previous Act of this Parliament are to
bear interest at 5^^. a day, and to be received in pay-
ment of taxes. One of the effects, and that not a remote
one, of this legislation was, that the Bank bills which
bore interest became more valuable than cash, and
those which bore no interest equal to money, so that
soon the Bank was able to circulate notes payable on
demand without paying interest to the holders,
and the contingency which Godfrey hoped for was
realised.
TUinci- At the beginning of the year 1698, rumours were
dent of 11111 •
Duncomie afloat that there had been a serious tampering with
Exchequer Exchequer bills, and Macaulay states that the rumour
was set on foot by Sunderland with the object of
ruining Montague, who had filled the Treasury with
his own nominees, and had thereupon displaced Dun-
combe, who was Sunderland's tool in the business.
An enquiry was instituted, and the accuser Buncombe
soon became the accused. He was guilty on his own
confession of using public money to buy Exchequer
bills, then at a considerable discount, and he admitted
III.] The Second Bank Act. 91
that he had paid them to the Excliequer on the plea i698.
that they had been received as taxes, putting the differ- *^~
ence into his own pocket. In order to give a colour
to his statements, he had induced a Jew to forge en-
dorsements on these bills. As at this time Exchequer
bills were at a discount of at least nine per cent.^
Duncombe must have pocketed about £1,000, per-
haps much more. On January 25 Duncombe was
committed to the Tower and expelled the House.
The issue of this event is well known. The
Commons determined to subject .Duncombe to a
bill of pains and penalties, and iotended by their bill
to confiscate two-thirds of his estate ; but the Lords
very properly threw the bill out.
It appears that at the time of Duncombe's offence
the English law was silent as to the punishment of
ordinary forgery, and that it was doubtful whether the
Courts could even convict the culprit of embezzlement.
There is indeed an Act of Elizabeth which inflicted
mutilation with other penalties on the forgery of
certain documents, and recently the Legislature had
put the penalty of death on the forgery of Bank
notes. But these very punishments seemed to ex-
clude by implication all similar offences beyond
those which were prescribed in the statute. The
law therefore could not reach the criminal unless it
were stretched, a practice which could not be ex-
pected from the Bench ; or Duncombe were brought
within an ex fost fado law, i.e. by a bill of pains and
penalties. That the Lords were right in rejecting
' Luttrell, January 15, 1698.
92 First Nine Years of the Bmik of England, [iii.
1698. the bill cannot I think be doubted, but to judge
"~" from the temper of the two Houses at the time, to
say nothing of the bare majority for rejecting the Com-
mons' bill, it seems plain that the Lords were quite
as much influenced by the desire to put the Commons
in the wrong, as they were by the higher motive of
vindicating the principles of English jurisprudence.
Buncombe was none the worse for the exposure and for
the action of the House of Commons. He was soon
made Sheriff and knighted, became at length Lord
Mayor of London, and eventually but indirectly
founded a noble family. It is just possible, nay even
probable, that the condemnation of Duncombe might
have involved some awkward revelations. I think I
may assign the cause of a faU in Bank stock during
the months of January and February to the distrust
which the evidence of these malpractices induced^.
The price The pricc of Bank stock goes slowly but almost
of stock in .
1698. without a break upwards during the year 1698.
During the greater part of April there is no price,
i.e. there are no transactions on the Stock Exchange
in Bank stock. On May 6 it suddenly rises to 95.
I know nothing which can explain the fact, except
that just at this date the Commons were debating
Montague's proposals for establishing the new East
India Company, and that the stock of the old
Company was rapidly verging to its lowest price.
It is possible therefore that the stock of the East
India Company was being sold, and the stock of the
' The forging of Excliequer bills was at once made a capital
felony.
III.] The Second Bank Act. 93
Bank was thereupon exceptionally in demand. Again, 1699.
on September 2 1 the Directors of the Bank declared *^
a dividend of seven per cent. This announcement,
it will be seen, was followed by a fall in the stock.
The last dividend had been on August 28, 1697,
But before the end of October the stock rose again,
and continued to rise till the end of the year.
At this time however the bank had begun an B.epay-
operation, which they steadily continued till they the loan
11 T T ■ rm • T 1 oaf Hal of
had completed it. ihis was the repayment to the 1697.
subscribers of the £1,001,171 los. which had been
subscribed, I conclude entirely by the old body of
proprietors, in January, 1697. The first payment
was on September 10, 1698, and for ten years the
Bank paid a dividend and a bonus out of their
profits, for they extinguished the stock of 1697 on
March 25, 1707, though still treating it as part of
their capital. I conclude too that the loans of
£240,000 of June II, 1696, and the £200,000 of
August 15, had been repaid to the lenders, from
whom the Bank had borrowed them. The difficulty
is to know whether this operation was generally
known, for if it had been published at the time it is
not easy to see why the price of the stock was not
much more considerably exalted.
The year' 1699 was uneventful for the Bank. At-Ba»^.
the beginning of it, under date of January 1 9, *^e yea^-
Luttrell says that several persons withdrew their
accounts from the Bank, and that its stock thereupon
fell two per cent. I do not find this statement
verified by my register. A considerable change had
94 First Nine Years of the Bank of England, [iii.
1699. indeed come over popular feeling, and the elections
in July to tlie new parliament were by no means so
favourable to the Whigs as they had been in that
one which had now, under the Triennial Act, been,
dissolved by the efflux of time. In particular, the
influence of Montague in the City was waning. This
is curiously illustrated by the career of Duncombe,
who had escaped the serious consequences of his own
confession only by a majority of one in the Lords,
when the Pains and Penalties Bill went to the Upper
House. But he was tried on June 1 7 for his offence
at the King's Bench, and was acquitted, the jury not
leaving their box. The grateful scrivener, we are told
by LuttreU, entertained the jury at a sumptuous
repast at Lockett's ordinary, and presented them
with five guineas each, alleging that the prosecution
to which he had been subjected had cost him £10,000.
That day week he was chosen. Sheriff of the City,
and in the course of the year, October 20, was
knighted. He instantly began to intrigue for the
place of Lord Mayor, and made the most liberal
offers to the citizens if they would elect him, in
particular promising to build the City a Mansion
House. As an earnest of his public spirit, he paid
the debts of aU who had been imprisoned for five
pounds and under. Meanwhile, Montague was
practically deposed from his place in the House of
Commons, and Harley was taking it. In 1700
Duncombe continued his benefactions, and on the
eve of a contest for the mayoralty, offered to lay out
£40,000 for the good of the City, if he were elected.
III.] The Second Bank Act. 95
besides setting up the King's statue in Cheapside. 1699.
At a poll these promises had their effect ; Buncombe '^
got 2,752 votes, and Sir Thomas Abney 1,919. But
on reference to them the court of aldermen, by a
small majority, elected Abney. Whatever the livery-
men might do, the aldermen could not make up their
minds to elect the forger, who did not reach the
dignity he coveted tUl 1708, when his promised
festivities were interrupted by the death of the
Queen's husband. Prince George of Denmark ^
The commercial world of London, keen after gain Tie. da-
racier of
and ambitious as it was, had withal a tolerably good London
character for commercial integrity, and understood
its importance to the growing reputation of the
metropolis. This integrity has had, as it has been pro-
gressively, and at last universally acknowledged, not
a little to do with the reputation which the United
Kingdom has long possessed, of unblemished honour
in satisfying its public obhgations. I am well aware
that commerce in those days, and indeed for a long
time subsequently, was unscrupulous and timid,
ferocious when offended, and impatient of rivalry at
all times. I do not set so very much store on the
adroitness of Montague in passing the English East
India Company Act. The old Company was tainted
by the vices of its management, by the bribery which
its officials had practised, by the saltpetre which it
had sold to Seymour, and by the guineas to which the
immaculate Leeds had merely given house-room. But
1 Prince George died on October 28, 1708. Lord Mayor's Day-
was then October 29.
96 First Nine Years of the Bank of England, [ill.
1699. on the other hand, it traded under a royal charter
quite as good in English eyes as the papal charters
which were the only genuine title to the foreign
possessions of Spain and Portugal, and except from
the fact that the ransom was paid to the public
Exchequer, I see no material difference between a
monopoly granted by Parhament and a monopoly
granted by the Crown. The parliamentary charter
of 1698 proved, in the end, even more mischievous
than the Elizabethan charter, then nearly a century
old. Again, the transports of passion which con-
vulsed the cities of Westminster and London, when
the facts of the Darien expedition became known,
were as unfounded as the reasons were which led
Paterson to project that unlucky scheme. Even the
Spaniards must have known that the colony was
doomed to failure^.
Their But in the London of the seventeenth, and o-reat
for City part of the eighteenth centuries, the merchant
princes vied with each other for civic honom-s. The
city knight was, I admit, already a theme of satire.
But for the matter of that, all men who raised them-
selves by honest intelligence, and honest dealing,
still aimed at the highest civic dignity, and as long
as they traded or dealt in the City, added to its
wealth, or administered its finances, were eager to
fill its municipal offices. No doubt the mayoralty,
hke all other securities in the City, was a speculation.
* I find many allusions in Luttrell to this famous and unfor-
tunate project. See, for example, June 22; July 4, 15; August
3, 10, 26, 29, &c.
honours.
III.] The Second Bank Act. 97
The gains of the Lord Mayor were the sale of the 1699.
offices which fell vacant, disposed of, as T find in *^
Luttrell, for about seven years' purchase. If the year
was barren in official deaths, the Lord Mayor lost by
the transaction^. If really rich men were elected or
nominated to the office of Sheriff, it was again a loss,
for no little part of the official gains of the City
aldermen were derived from the fines of those who
declined the honour^. I cannot indeed pretend to
follow the history of the Mansion House and its
occupants, but I am sure that the loyalty of London
trade and finance to its municipal institutions had a
good deal to do with the -making of one part in
the English character.
One event occurred during the recess of 1699 rAeajfair
(June I -November 16), in which I find that Luttrell ^fpa»is4
states that which my record does not confirm. The s^m.'
Spanish Ambassador, the Marquis Gonzales, was
instructed to remonstrate on the second Partition
Treaty, which William and the other European
powers were negotiating with the French Court, after
the death of the Electoral Prince. The remonstrance
did not take the form of a diplomatic minute, but of
a manifesto addressed to Parliament and the public.
On September 30 the Ambassador was ordered to
leave England, and Luttrell says that the King's
^ See Luttrell, October 31, 1699.
^ When Duncombe and Jeffreys were elected Sberififs in 1699,
the aldermen were greatly disappointed, ' who thought to have
gained £3000 or £4000 by fines.' Buncombe's duty was to
superintend the hanging of those who had committed the crime
from the consequences of which be had escaped. Luttrell, June 27.
H
98 First Nine Years of the Bank of England. [III.
1700. message (he was still in Holland) was, ' For your
~~" seditious memorial, your house is your prison while
you stay, and in eighteen days you are to depart
this kingdom.' On this we are told, under date of
October 5, that ' the bank and other public stocks in
this city have fallen five per cent, since the Spanish
Ambassador was ordered to leave the kingdom.' I
do not find this in the price of Bank stock, or indeed
of any other stock. On the contrary, they are all
rising. At the very end of the year, Newton, not yet
Sir Isaac, was raised from the post of Warden of the
Mint to that of Master. The new coinage was now
completed, and the great mathematician was fitly
rewarded for his honest work. It is good to see
that Montague's nominee was not disparaged by
his patron's fall.
BanTc The year 1 700 opened with a great rise. At the
1700. end of December Bank stock was at 1 1 ']\, and by the
^'ciai middle of March it rose to 1485, the highest price
prosp&nty. ^].^(;]j J ]jave fouud during the whole nine years.
The harvest of 1699 had been abundant, and the
crops of the year 1700 were uniformly good. The
rise is noted by Luttrell, who gives the prices for
several days in the first quarter of the year. Thus
he states that it was 142 on February 3 and February
20, 150 on February 29, 149 on March 2, about 143
on March 5, that on March 20 a dividend of £5 5s.
per cent, was declared, and that on April 23 it was
141. My record states that there was no price
between March 22 and April 26. It will be seen
that LuttreU's figures do not materially vary from
III.] The Second Bank Act. 99
those of Houghton, and may be only the difference 1700.
between sellers and buyers. ^
There can be no doubt that this upward movement
is due in great part to commercial activity and
prosperous trade. The fact is to be found in the
rapid rise in the stocks of the two East India Com-
panies, notwithstanding the increased taxation to
which the goods which they imported were subjected
by Parliament. This is confirmed by a return of
the customs received at the several English ports
for the fifteen years 1 700-1 714, the average being
£1,352,764^ But both the years 1700 and 1701 were
in excess of the average, though during the War of
the Spanish Succession new duties were laid on.
The character of the rise is further illustrated by influence
the effect which the capital item of foreign poHtics pontics o»
at that time had on the prices of stocks. I mean *
the ill-health and probable death of the last King of
Spain of the elder Austrian, family. It was known,
for a long time before this -event actually happened,
that Charles II was in a most deplorable condition,
that he had no hope of posterity, and very little of
life. Now, as is weU known, the diplomacy of
Europe was busied in settling the succession to the
vast dominions of the Spanish monarchy, and in
maintaining the balance of power in Europe. Phihp
the Second of Spain had arrogated to himself on one
plea or the other a universal monarchy, either in his
own person or in that of divers members of his
family, and had ruined Spain in the struggle. Louis
^ Macpherson's History of Commerce, iii. 45.
H 2
loo First Nine Years of the Bank of England, [in.
1700. XIV of France had transferred the tradition to him-
self, and the war which ended with the Peace of
Eyswick was waged for the sole purpose of defeating
this object.
Immediately after the treaty of Ryswick, William
employed all his diplomatic skill in securing the
succession for the Electoral Prince of Bavaria. But
the Prince died, and the second Partition Treaty was
negotiated, with the view of putting the younger
son of the Emperor on the Spanish throne. This
seems to have had the approval of Louis, who would
have agreed to it for a consideration ; and might have
been acceptable to Charles of Spain, had he not been
influenced by his minister Portocarrero. Besides,
while the negotiation was going on, the unfortunate
Darien expedition was undertaken, and Spain was
rendered distrustful and hostile towards England.
On a rumour, under date of March 5, that the
King of Spain had suffered a relapse, Bank stock fell
to about 143^. My record gives a fall of three, from
148 to 145. It soon recovered again, and to the
highest point which it reached, but it gradually re-
lapsed, tiU at the beginning of May it was ten per
cent, lower than it was in March. This was pro-
bably due to the rumours of a collision between the
Swedish and Danish Governments, and to the risk of
a serious interruption to the Baltic trade.
The illness of the Duke of Gloucester, and his
early death on July 30, seem to have had an effect
on Bank stock, which, having fairly recovered the
1 Luttrell.
III.] The Second Bank Act. iot
fall of three and a-half in May, fell two and a- 1700.
quarter at the end of July and the beginning of
August. But at the end of this month it had risen
to 142. Then it fell to 130^^ in the second week of
October. This Luttrell tells us, who quotes the
stock at 130, was due to rumours about the con-
dition of the Spanish King, and the risks which all
commerce ran, in the event of his death, while the
succession was unsettled, though it was generally
believed that he had bequeathed his crown to
Charles of Austria.
Besides this we learn, under date of Oct. 5, that a -D«»-
n -i -r\ 1 11 combe's
project was set on foot by Buncombe and others, to reputed
advance money to the Government at five per cent.,
and as a first instalment of their operations, to raise
four millions at this rate, with a view of paying off
the Bank and the new East India Company. Now
the stock of the new or English East India Company
(the old Company had been chartered this year by
Act of Parliament) was two millions, that of the
Bank twelve hundred thousand pounds. The differ-
ence then of £800,000 must be a rough estimate of
the amount still due from. the Government to the
Bank on loans which had been contracted, but which
do not appear in the capital of the Bank. There is
nothing more said about this project, attributed by
Luttrell to Buncombe, but it is indirect evidence of
how commercial prosperity and rapidly accumulating
capital were reducing the rate of interest in London.
Even if it were a mere rumour, it must have been
a probability in order to have been circulated at all.
I02 First Nine Years of the Bank of England, [iii.
1700. Two years before, the Government, giving great
~^ privileges to the new East India Company, borrowed
of them at seven per cent,^ It should however on
the other hand be remembered that Duncombe had
just been returned at the head of the poll for the
oflSce of Lord Mayor, and that his name and that of
Abney were now before the Court of Aldermen.
Death of Qu November i, old style, came the news of the
the King
of Spain. King of Spain's death, which happened on the same
day, new style, and with it the information, hitherto
kept a secret, that he had bequeathed his kingdom
and possessions to the Duke of Anjou, the French
King's second grandson, and next in the succession to
the French throne, after his brother. But the news,
having been already anticipated and discounted, pro-
duced no effect on Bank stock, which remained at
the same price, 129, without variation, till the last
week of the year, when it suddenly fell to 124^, and
next week to 123.
Movements J think there can be no doubt as to the cause of
in Europe.
this. Louis of France, as every one knows, accepted
the crown of Spain for his grandson, and the whole
of Europe became uneasy with the feeling that the
war, which every one wished to avert, was inevitable.
* That a rumour of this project of lending the Government money
at five per cent, was circulated is a proof of the great service
which the Bank had done the country and commerce by lowering
the rate of interest. The statement as to the new East India
Company being included in the project is evidence of the Whig
character of its administration. The object of the project was
not to annul the Bank's charter, which was secured till 17 10,
but to put the Company into a difficulty with regard to its
capital. See Davenant, vol. iii. p. 326.
III.] The Second Bank Act. 103
The King of France began to raise forty more 1700.
regiments ; the English navy, which Parliament
had not stinted, was being rapidly provisioned ; the
Dutch ordered an increase in their navy ; the
Emperor was protesting that the King of Spain
was incapable of making a will, and was threatening
to send an army of 50,000 men into the Duchy of
Milan, though he had not the means for putting in
motion a single regiment ; a new pope was hurriedly
elected, Clement XI, who was only fifty years old,
and occupied the papal throne nearly twenty-one
years, the longest reign with the exception of Urban
the Eighth's for well nigh a thousand years ; and the
lesser German states were looking forward to a renewal
of English subsidies. The English were in the turmoil
of a general election. Montague, now Halifax, had
gone to the Lords, and there was every prospect
that the new Parliament would have a Tory majority.
The indefatigable Duncombe^ was a candidate for the
City of London, but the electors chose Whigs, the
polling having lasted four days^. StiU there were
^ Dunoombe was returned for Ipswich. There is a pamphlet
of 1 701 entitled 'The Liveryman's Reasons why he did not give
his vote for a certain Gentleman, either to be Lord Mayor, or
Parliament Man for the City.' The reasons confirm what I have
said above. During this time, a society had been founded for ' the
Eeformation of Manners,' some of the patrons of which were said
to have been scandalously profligate. A satire, probably by Defoe,
was published about this time. The following is its allusion to
Duncombe, one of the society : —
' Buncombe, the modern Judas of the age,
Has often tried in vain to mount the stage.
Profuse in gifts and bribes to God and man
To ride the city horse, and wear the chain.'
^ The most important elections were those of Loudon and
I04 First Nine Years of the Bank of England- [ill.
1700. 150 new men in the Parliament, and some of the
*^ worst among the old members were returned. Harley
was chosen Speaker by nearly two to one \
TFardis- The HousG of Commons was certainly unwilling
as efu . ^^ g^ ^^ ^^^^ ij,j^^ dislike to the renewal of hos-
tilities was not confined to the Tory party. Neither
was it, from the point of view which the House
took, unreasonable, as events conclusively proved^.
There were personal motives to influence men in
hesitating to take the step of resisting the quiet
acceptance of Philip by the Spaniards, and there
were reasons of policy, by which the English Hoiise
of Commons concluded that the balance of power
would not be injuriously compromised, if England
were to remain at peace.
The state Even though the war concluded at the Peace of
Finances. Eyswick had been followed by three years of peace,
the settlement of the debts contracted in that war
had not been effected, nor was this settlement arrived
at till after Anne had been reigning for some years
and a new war had been undertaken. It is true that
the peace expenditure of the country was not more
than half that incurred annually during war. But
the floating and the permanent debt had been raised
Westminster. On tHs occasion Ashurst, Heathcot, Clayton, and
Withers were elected ; Buncombe, Fleet, Child, and Pritchard were
defeated. Vernon (whose correspondence, mainly with Shrewsbury,
has been printed) and Crosse were elected for Westminster.
' Onslow had 125 votes, Harley 249.
^ I have found these views in many pamphlets of the time.
During this period 'public opinion' can be found in pamphlets
only.
III.] The Second Bank Act. 105
at high rates of interest, and war taxes remained a 1700.
necessity even after the war was over. Besides, "*
the executive was exceedingly weak. Parhament
exercised to the full its right of criticising public
affairs, and even of initiating votes of expenditure
and schemes of taxation. The Grovernment was in a
permanent minority in the House of Commons, and
though, one after the other, ministers of abihty and
character were displaced, because they were assailed
by the House of Commons, no one seems to have
seen that the true remedy was to throw the duty of
administration on the malcontent majority ^. It was
therefore impossible that any bold and compre-
hensive scheme of finance could be undertaken by
the Ministry. The great measures of Montague
were loans at high rates of interest, negotiated on
the basis of a commercial monopoly, and the issue of
a paper currency, redeemable from the produce of
future taxes.
The excise was never popular and, though freely Excise and
used after the Revolution, was constantly resented,
not only because it was vexatious, but because it
strangled industries which were just beginning to be
^ This was the principal, but by no means the only reason why
the House of Commons was so demoralised and disorderly for
nearly the whole of William's and all Anne's reign. The Triennial
Act was a blunder. The reform really wanted was some repre-
sentative system like that which Cromwell ordained with his
Council in 1654, under which the amount of representation was
made to square roughly with the amount of taxation, and the
franchise was conferred on those who had £200 worth of property.
I am of course comparing this scheme with that which it super-
seded, not defending its details, or even criticising them.
io6 First Nine Years of the Bank of E^igland. [III.
1700. profitable. If one studies the finance of the time,
one sees how disappointing and how irritating many
of these excises were, and how they had to be
abandoned. And if excises were unpopular and
unproductive, increased customs' duties were con-
stantly unfruitful. The owler, or smuggler, was
always in advance of the revenue officer, and could
generally evade him. Macaulay has preserved a
saying of this time, that if a row of gibbets had been
erected along the south coast, they would not have
seriously checked the smuggling, which was of
course carried on, not only with profit, but with
impunity. In Scotland, during the century which
follows the period on which I am commenting, the
cost of collecting the customs' revenue was regularly
in excess of the revenue collected^. Hence the
dealers at the large ports, who paid the duties, were
handicapped by those who provided themselves with
the same article but evaded the tax.
Theincorm There was no remedy then, except that of raisinsr
tax, and, , . .
official extraordinary supply by an income tax. The in-
come tax of William's reign was a levy of twenty
per cent, on all sources of revenue, the capital of
chartered companies being statutably exempt from
the charge. In the first years of its imposition, that
assessment which has survived to our time under
the name of the land tax was really an ad valorem
income tax, and the financiers of the time did not
shrink from taxing the labourer's wages as well as
the landlord's rent, and the merchant's gains or
' Macpherson, passim.
III.] The Second Bank Act. 107
investments. It is probably true that the valuation 1700.
being in the first instance and subsequently a volun- ^*~
tary one, or at the most a parochial or municipal
assessment, the actual percentage was not so high
as it was theoretically, but the burden must have
been very great. Besides, the proceeds of the tax
were so greatly reduced by the percentages taken
from it by those officials through whose hands it
passed, that the taxpayer had the grievance of
seeing that his sacrifices only tended to enrich
officials ^ The patent offices charged on the revenue
were numerous, the duties of the officers were light
or nominal, the income secured by the fortunate
possessors enormous, when compared with those
obtained by genuine industry. So much did the
system influence people, those people at least who
profited by it, that Gregory King, one of the acutest
observers of the time and himself a placeman,
reckoned that the only persons who added to the
wealth of the country were those who were able to
save money by planting themselves on the public
service, or who received rents ; and conversely, he set
all those down, whose labour produced wealth, as
unproductive members of the social system^. Now
^ Apart from his percentages, the official could speculate with
the money up to the time when his audit was due. Up to
thirty years ago, the salary of the Oxford Vice-Chancellor was
the profit he could make by dealing with the University balances
during his term of office.'
''■ The whole of King's statistics and comments are given in
Eden's History of the Poor, from Davenant. I have referred to it
in detail in my Six Centuries of Labour and Wages, p. 463.
1 08 First Nine Years of the Bank of England, [ill.
1700. war meant a twenty per cent, income tax on rent,
wages, and some profits. It is no wonder that
Englishmen were alarmed at the cost of war, and
doubted whether the nation could bear a load of
debt and a war expenditure as well.
FvMic And then for what object % Many people at that
opinion . ...
on the time saw, and affirmed, that if Philip of Anjou
situation. . , . . . r> i ci • i i
remamed m quiet possession 01 the bpanish throne,
the country over which he ruled would not be more
likely to shape its policy on French lines, than it
would be if a prince of the house of Austria ruled
over it. 'So far,' they argued, ' wUl it be from being
the case that the accession of the French King's
grandson will affect the balance of power, that it
will certainly and speedily assist in maintaining it.
The abler the new King of Spain is, — and he can-
not be so feeble as the poor creature whom he suc-
ceeds, whose life was one long death, — the more
must he study Spanish interests. And even while
Charles was living, his subjects saw in him the
impersonation of the Spanish Empire, and of a
Spanish policy, and made war on Louis for both
objects. It is absurd to think that these Spaniards
wUl submit to be the tools of Louis, allow Spain to
be a province of France, and their king to be a viceroy
for his grandfather. If Spanish interests run counter
to French ones, 110 tie of blood or alliance will
prevent a collision between Spain and France. If
France presumes to dictate to Spain, there will be
either a rupture between grandfather and grandson,
or the Duke of Anjou will soon be driven from his
III.] The Second Bank Act. 109
throne. The power of monarchs even in an age 1700.
more despotic than the present had very intelligible "^^
limits. A century ago, nothing served Henry of
Navarre better than the relations which Philip the
Second established with the Gruises, and the purposes
which he was known or suspected to have formed ^'
' What interest,' they asked, ' has England in the
(][uestion as to whether Philip of Bourbon or Charles
of Austria shall reign in Spain 1 The Spanish
Empire may be ready to fall to pieces, but we want
none of it. Very likely the Emperor of Germany
longs to recover those Italian provinces over which
his predecessors exercised a precarious rule. Very
possibly the French King cherishes the dreams of
Charles the Eighth and Francis the First. He will
certainly be less able to turn them into realities if
he is to be hampered with the defence of his grand-
son's inheritance, still less if he tries to make spoil of
it. Nothing is more costly than a protectorate over
a country which is intensely jealous of its inde-
pendence, but which will readily accept the money
and arms which it cannot provide from its own
resources. This is the experience which Louis has
had with the Spaniards and with the Austrians.
By the Peace of Eyswick the French King sub-
mits to the English Eevolution. We are no longer
in. fear that France will attempt a descent on
England, or even on Ireland, in order to restore a
King, who is already broken in health, or a minor,
to the English throne, especially one whom even
' I am again condensing the political pamphlets of the time.
no First Nine Years of the Bank of England, [ill.
1700. the more respectable non-jurors believe to be sup-
posititious. If his grandson is allowed to keep quiet
possession of Spain, the Emperor and Louis may
fight out their quarrel withovit our meddling in the
matter.' I find that this was the way in which the
country party reasoned, even those who had received
none of the pistoles which M. Tallard was reported
to have distributed from his strong box among
members of Parliament, in such large quantities,
that current opinion set down an issue of 100,000
guineas to the conversion of base French bribes into
good English money \
' There is no doubt,' such persons would go on to
argue, ' that the Dutch have some reason to be alarmed.
Part of the Spanish king's inheritance is the Low
Countries, and even Holland, in the eyes of so sensi-
tive a person as a beggarly Spanish grandee, ought
to be part of the Spanish empire. Very possibly
however Spanish king and Spanish grandee may
be content to pledge Flanders for present help. But
are we to be everlastingly spending our money and
our lives for the sake of the Hollanders \ They are
our rivals in trade, unscrupulous rivals. They have
been our enemies. The only creditable part in the
old usurper's career was his having put these Dutch-
men down, and the only respectable part of his
^ Tindal makes this statement. It is said that this was the
first election in which the candidates bribed the electors, corruption
having been previously the privilege of members. The funds
were found by the old and new East India Companies. 'The
Tories used to call bribery " giving alms." ' In December, 1 700,
the old was at an average of 121, the new at i43f.
III.] The Second Bank Act, 1 1 1
legislation was the act under which he crippled 1700.
their trade. We spent money enough in the late *^~
war, and the Dutch took heavy toll on our expendi-
ture. Are we forsooth to begin anew, and of our
own free-will, the experiences of the past, and to
have honest English taxes, wrung from us to main-
tain our own soldiers, discounted in the bills we
have to draw and the cash we have to send on
the Amsterdam exchange to the extent of from
twenty-five to thirty-five per cent. % We admit that
the King has been a powerful instrument for our
good. On his mother's side he is an Englishman.
But on his father's he is a Dutchman, and the
father's blood overpowers the mother's. He slights
us when he can. Directly he has got our cash
he is off to the Hague. He quarters on us his
Dutch favourites. He can hardly be civil to an
Englishman, unless he be one of those upstarts who
have carved out for themselves vast fortunes from
the English taxes or the crown estates. We all
know that he does not care for the Church, and
that in his heart he favours the sect which made
havoc of monarchy and of the Church too.' Such
reasonings were current, not in Jacobite clubs only,
or in nonjuring conventicles, but among men who
had no hankering for the exiled family, who believed
that the Pretender was a fraud from his birth,
and were furious with Fuller for affecting to prove
to them what they believed ^
^ Fuller more than once published what he called an exact
account of the birth of the Pretender and of the way in which
men.
112 First Nine Years of the Bank of England, [ill.
1700. The moneyed men, who had founded and pro-
Yic^s tected the Bank, and had subscribed the loan for the
moneyfa ^^w East India Company, dreaded, as we shall
soon see, the risk of another war. The profits
of trade during the three years' peace had greatly
increased, as the customs would prove. 'We,' they
might say, ' are reaping the fruits, the just fruits
of our confidence in the Kevolution, and of our
reliance on the King's advisers. Are we to go
back to the risks of another war, when privateering
will be the natural resource of an enemy who
cannot meet our fleets, but can prey on our property %
We are beginning to put down piracy, shall we put
ourselves within peril of privateering, of which
piracy in the Indian seas is the inevitable conse-
quence \ Look at the case of Captain Kidd. With
the best intentions honest men sent this fellow at
their own cost to crush out piracy, and he became
the terror of all nations. We shall have Kidds by
the dozen if we go to war. It is our interest to
keep out of it, and protect the trade which we have
already create d^'
his mother was made away with by Louis and Mary of Modena.
He got pilloried for his paius, as a 'notorious cheat and impostor.'
Another pamphlet of the same time was widely circulated, in
which it was alleged that Louis XIV was not the son of Louis
XIII but of one Le Grand, and was therefore naturally interested
in defending the interests of another spurious claimant of royal
rank. The title-page has the attractive advertisement, that Louis
XIV offered 5000 pistoles for the capture of the author.
^ It would be superfluous to quote all the pamphlets of 1701
from which this description of public opinion has been con-
densed.
III.] The Second Bank Act. 1 1 3
The dissolution of December 19, 1700, led to the 1701.
election of a Parliament, which was more factious and
The
more mischievous than any of which William ever had -^^''f*'*:
^ ment of
experience^. It was unluckily presided over, as the '''°'-
last was, by Harley, who aggravated its misconduct.
And yet it does not seem to have had Jacobite
tendencies, or to have been designedly negligent of
pubhc interests. That it hated and distrusted the
King's late advisers, Sommers, Halifax, Orford and
Portland, and believed that they had dishonestly
enriched themselves at the expense of the nation, is
stated over and over again in the copious literatme
of the period, and was certainly believed by many.
It is equally certain that many men, who had been
and remained sincerely attached to the principles
of 1688, were now in the ranks of the opposition,
entirely distrustful of William's foreign policy, sus-
picious of his councillors, and averse to any war
whatever on behalf of the German Emperor and
the States General. Nor can I think William's ad-
visers had done him and the pubhc good service in
leaving the finances of the country in that suspicious
confusion, on which , the Parliament of 1701 deter-
mined to report.
The unfortunate quarrel between the two Houses, Quarrels
a chronic trouble, which had lasted from the last the Lords
quarter of the seventeenth century till the passage Commons.
of the Septennial Act, was now at its height. The
' Sommers was dismissed from office on April 17, 1700, and
Sir Nathan Wright made Lord Keeper, after the office had been
refused by Holt and Trevor, (not the old Speaker).
I
1 14 First Nine Years of the Bank of England, [ill.
1701. Commons interpreted Parliamentary privilege witli
such exaggerations that there was some reason in
the concluding sentence of the Legion letter that
' Englishmen are no more to be slaves to Parliaments
than to kings.' At one time there were no less than
thirty-seven persons committed to various prisons
by direction of the House. The Lords were not less
tenacious of their own privileges. They resented
any comment on the conduct of any among their
Order, however justifiable the comment might be, and
they claimed for themselves and exercised an appel-
late jurisdiction, in which their decisions were not
above the suspicion of party feeling and even of per-
sonal interest^. There were in short two oligarchies
in existence at once, mutually jealous and equally
aggressive. The counties and a few large towns
did send representatives, but in the division lists
the proprietors of Grampound, Old Sarum, Gatton
and St. Mawes, with more than a hundred other
nominal boroughs, might override the deliberate
voice of all that was really representative 2. And
' Peers who were quite ignorant of law voted on appeals. The
lawyers avenged themselves by not reporting cases in the Lords.
At last the custom of lay lords voting on legal points ceased, I be-
lieve in consequence of some strong remonstrances in the Douglas
Peerage Case, 1769.
" Among the pamphlets of 170 1, there may be found a scheme
of representative reform, called 'the free state of Noland,' in
which the writer proposes a plan under which there should be
a progressive system of local government and limited legislation,
from the parish, through the hundred and county, up to a central
and united Parliament, each of these assemblies having a certain
amount of legislative authority, and the whole representation
being based on numbers and property.
III.] The Second Bank Act. 1 1 5
neither House was under any effective control. 1701.
There was no real discipline in the Commons, and '^~
the later practice of Parliament, under which the
initiative in administration, in supply, and in legis-
lation became the business of a responsible govern-
ment, was as yet unknown. I know nothing which
better illustrates the difference between these times
and our own than the language in which Speaker
Harley is criticised, * If such a person as the Speaker
happens to be a man of crooked designs, notorious
for falsehood and insincerity, as well as other im-
moralities, and engaged in all the interests of
a Party,' such and such conduct is to be expected.
And on the other hand, the Tory party raked up
a story about Sommers, who, when he was an
attorney, some twenty-five years before, had been
taken into custody by order of the House, on sus-
picion of advising malpractices.
I have found it necessary to dwell a little on
domestic affairs, because — owing to the early death
of the great historian who undertook to narrate
the reign of William, and performed his task, in
so far as he was able to complete it, with such ex-
haustive fairness — about fifteen months of the story,
between the prorogation of the parliament in June,
1700, and the death of James in September, 1701, are
left untold. This period comprises the anxieties which
preceded and the alarms which followed the death
of the King of Spain, the resumption of hostilities
between France and the German Empire, consequent
on the acceptance of the Spanish King's bequest
I 2
1 1 6 First Nine Years of the Bank of England, [iii.
1701. by the Duke of Anjou, to -whicli Louis resolved
on giving effect, in spite of his repudiation of all
claims on the Spanish monarchy for himself and
his descendants in the treaty of the Pyrenees, and
of his similar avowals in the first Partition Treaty
and in the guarantees of the United Provinces.
The latter had much reason to be alarmed. Since
the Peace of Westphalia, now more than sixty years
old, but still the settlement to which the advocates
of the balance of power constantly referred in all
their wars and all their negotiations, Spain had
taken no direct part in the administration of the
Spanish Netherlands, though Spanish statesmen still
insisted on the fact that these provinces were an
integral part of the Spanish empire. The Dutch
had indeed nothing to fear from the scanty and
bankrupt finances of Spain. But it was a totally
different thing when Louis, the most powerful and
the most despotic monarch in Europe, the resources
of whose kingdom, both in men and money, seemed
inexhaustible, and who was not dependent on distant
mines and sea-borne tributes, but on the internal
resources of Prance herself, could in the name of his
grandson claim the inheritance of Flanders, and give
effect to that claim by his armies, by his generals,
and by the wealth of his dominions. The Peace
of Ryswick had really left him stronger than before.
It had acknowledged some of his conquests, such as
Strasbourg ; it had, concurrently with the partition
treaties, enabled him to claim a dominant position
in Lorraine. It was really a truce negotiated in his
III.] The Second Bank Act. 117
interests, and giving him time, during which, after 1701.
a short respite, he could collect the means by which
to give effect to the designs of Henry his grand-
father, and of Kichelieu, whose European policy was
a tradition with Frenchmen up to our own times.
It is plain that during the early part of the year :Bume
, , . opinion in
1 701 the southern counties in England were greatly ^»«, <tc.
alarmed at the French King's preparations, and at the
policy of the Parliament in 1 700, which had insisted
on disbanding the army. The men of Kent did not
share the opinion of the country party, constantly
asserted, that it was far easier to collect an army
than to disband one, and they were seriously afraid
that the French King was meditating a descent on
unguarded and unarmed England, and that Kent
of course would be the point of attack. They be-
lieved that the security of Holland was the safety of
England, that Amsterdam was an outlying fortress
on the English frontier, and that self-interest as well
as justice and the faith of treaties bound us to defend
the United Provinces. The majority of the House
of Commons did not share these alarms, and was
bent on other objects. They were under the in-
fluence of Seymour, of Shower, of Howe, — 'the
impudent scandal of Parliaments,' as he is described
in the famous Legion letter, — of Hammond, and
of Harcourt. Every one of these men but the last
had a scandalous record. Seymour had been bribed
by the East India Company and detected. Shower
had been concerned in the worst acts of the late
reign, and was Seymour's nominee at Exeter ; Howe
1 1 8 First Nine Years of the Bank of England, [ill.
1701. had been the most venomous libeller of the King,
and was currently said to have called his sovereign
a felon; and Hammond, member for Cambridge
University, was notoriously in the pay of France.
™« This Parliament met on February ii, 1701, when
meeting .^,
ofPariia- the King told them 'that the death of the King
of Spain, and the acceptance of the throne by Philip,
Duke of Anjou, had made so great an alteration
in affairs abroad, that he must desire them very
maturely to consider their present state.' He added,
' that these things were of such weight that he
thought them most proper for the consideration of
a new Parliament, so as to have the more immediate
sense of the kingdom in so great a conjuncture.'
Harley had been re-elected Speaker the day before.
The Lords reported on the King's speech at once ;
the Commons on the 1 5th resolved, ' that they will
stand by and support his majesty and his govern-
ment, and take such effectual measures as may best
conduce to the interest and safety of England, the
preservation of the Protestant religion, and the
peace of Europe ; ' the last four words being carried
on a division by a majority of 22, a pretty clear
proof of how averse the House was to war, and how
much their foreign policy was to be subordinated
to personal and domestic considerations. They in-
stantly proceeded to discuss financial matters, ranging
their enquiry over the last ten years, and requested
the King to lay before them all treaties and alli-
ances made since the Peace of Ryswick. They then
took to receiving petitions and expelling members,
in.] The Second Bank Act. 119
their principal victims being the Whigs; and if 1701.
one can believe their contemporary critic, Tindal^, "
what they denounced as bribery in the minority
they termed almsgiving in the case of the Tories.
The same author avers that the custom of bribing
the electors began with this Parliament, the previous
practice having been to bribe the members, and that
the two East India Companies supplied the funds.
On February 1 7 the King communicated copies TU letter
(translated from the French) of a letter which pur- "
ported to be written by Melfort to his brother, the
Earl of Perth, and governor to the so-called Prince
of Wales. It was said to have been found in the
French mail which had lately arrived from Paris,
and was forwarded to the King by the Postmaster-
General. The Lords thanked the King for the
communication ; the Commons seem to have taken
no notice of it. Of course, as it was a communica-
tion from the Crown, it is entered on the journals
of both Houses.
The Commons it is clear considered the letter
to have been a forgery. It is, unlike most of
Melfort's letters, couched in moderate language,
though it insists that the King should be restored
without conditions. The most suspicious part of
the letter is that in which the writer dwells on the
unarmed state of the kingdom, on the ease with
' Tindal was a Whig, and a pretty strong partisan. But the
facts bear out his criticism. Long after this time, election petitions
were mere party contests, in which very scanty evidence satisfied
the majority, even if they listened to it.
I20 First Nine Years of the Bank of England, [iir.
1701. which the discarded soldiers could be induced to
declare for the old King, on the strength which the
nonjuring party would have in the event of a counter-
revolution, and on the importance of Perth's putting
himself in communication with the Earl of Arran, as
Melfort calls the Duke of Hamilton. The Commons
too might have suspected that the emphasis with
which the supposed writer dwells on the unarmed
state of the country, may have been intended to
stimulate them into restoring the whole or great part
of the army which was disbanded the last year ^.
The action On February 25 the Commons granted 30,000
Commons, men for the summer service of the navy. But
during the greater part of this and the next month
they were engaged with elections, many of which had
been presented, and invalidated the return, and we
are told with the greatest partiality, of many Whigs.
They then came to a series of resolutions as to the
succession, now rendered more than ever necessary
by the death of the Duke of Gloucester, resolutions
which were afterwards engrafted on the Act of
Settlement. Their other business was the discussion
of the treaties which had been laid before them, and
the preparation for the impeachment of the four
lords. The resolution to proceed against them was
taken on April i, and on the 15th of this month
' I confess to feeling grave suspicions as to this letter. Of
course, if it was a forgery, William had been imposed on, probably
by an over-zealous partisan. It was an age of political forgeries,
and a man might have fancied himself justified in disinterestedly
doing that in a good cause, which too many men were willing
enough, and for their own gain, to do in a bad one.
III.] The Second Bank Act. 121
they addressed the King with a request that he 1701.
would exclude the whole four from his counsels for '~^
ever. The Lords, on the other hand, approached the
King with a prayer that he would take no step tiU
the imjjeachments were over.
It must not be imagined that the Lords approved ike mew
of the treaties, the particulars of which were now the Lords.
put before them. They evidently imagined that the
King was influenced by other than English interests,
that he had not consulted his council, that negoti-
ations subsequent to these treaties were dangerous
to the peace and safety of Europe, and that Louis
could be trusted in nothing, unless he conceded
what was a real security. They plainly thought
that William, with all his experience and acuteness,
had been taken in, and that there was now more
risk of a long war, and a general war, than there
would have been if William had declined to treat
with Louis at all, after the flagrant violations of his
promises and pledges. They saw, or thought they
saw, that Louis had never been sincere in his
engagement on behalf of the Electoral prince, or in
the second set of stipulations, and that he merely
desired to gain time, in order to hoodwink his
neighbours, while he was carrying out all that he
had secretly resolved to do.
What neither House saw was that Parliament The cause
was really the cause of the breach of faith of which French
Louis was guilty. The King of France had never ac«o».
afiected to consider anything binding which interfered
with his purpose of making himself the arbiter
12 2 First Nine Years of the Bank of England, [ill.
^^0^- of Europe, or, as he phrased it, of promoting the
glory of France. He knew that the Emperor was
poor, that Spain was helpless, that Holland alone,
however resolute, was no match for him, and that
England had deliberately disarmed herself. At one
time, England could have taken the field with an
efl&cient army, and could have paralysed France at
sea. To be sure, it was still important, that England
and Holland were the only two European states which
could maintain armies. On the other hand, the re-
sources of Louis were abundant, his army in a high
state of efiSciency, his ascendancy unquestioned, and
his maxim, that the last pistole wins, was likely
to be illustrated by his own success. The prize he
sought for himself was the Low Countries, and it
was for this region, as far as Louis and the allies
were concerned, that the War of the Spanish Suc-
cession was actually fought^.
The vexation, the humihation, the despair of Wil-
liam, who saw this clearly, must have been extreme.
He believed, and with justice, that he had at any rate
checked the career of Louis, and had shown what
England might be, if she were only resolute and true
to herself. And now his policy, his own reputation,
his countr}'- were at stake, and the stake seemed lost.
He had done his best to avert the mischief ; and the
action of the House of Commons had made Louis
^ He intended to make the Duke of Bavaria, who declared for
him, after his own son's death, the nominal ruler of the Spanish
Netherlands. Still, the House of Commons shared the sentiments
of Arbuthnot's famous pamphlet, ' Law is a bottomless Pit.'
III.] The Second Bank Act. 123
audaciously triumphant. He was assured that if the 1701.
late Parliament had not paralysed his action, the hand
of Louis would have been stayed. He saw that the
struggle must come, and that what he had striven to
effect had been wrecked by the jealousy, the timidity,
the factions of the men whom he had to use. The Par-
Hament of 1 70 1 was the death of William, for when
the reaction came, it was too late. Whatever were
the errors of William as an English King, no English
King was ever so maUgnantly thwarted. I am not
prepared to accept aU that Macaulay says of him in
his praise, but I am sure that he was the worst-used
sovereign who ever sat on the English throne. But
some of the best work which William did was his
foreign policy in 170 1. It was of infinite service to
the allies.
The story of the impeachment is well known, and Tie
has no importance in connection with the object mereio/*Ae
before me. But it is noteworthy that Marlborough
was among the peers who were willing to condemn
Sommers^. I cannot but think that this astute
personage saw clearly enough that war was in-
evitable, and that his services would certainly be
needed as soon as war was declared. But he was
not willing to quarrel with a party which was, for
the time being at least, in the ascendancy, and was
^ Most of the protests on tTie abandonment of the impeachment
were published, though some were quickly expunged. In the
pamphlets of the time the peers who voted at each stage of the
proceedings against the four lords are given. I recovered some of
these expunged protests with great difficulty. See my Protests of
the Lords.
124 First Nine Years of the Bank of England- [IIL
1701. even getting powerful in the City, for when Heath-
cote, a Whig, was expelled the House, Fleet, a Tory,
was elected in his room. And on the other hand,
Marlborough knew perfectly well that if the English
nation felt that their liberties were in danger, and
even if their pride were affronted, they would
effectually resent an insult. He therefore trimmed
cautiously, for he must have been well aware, that if
definite charges of bad faith could be brought home
to Louis, though the proof would not weaken him in
France, it would strengthen the alliance against him
elsewhere. As he must have foreseen that war was in-
evitable, so he was perfectly alive to his own military
abilities, and quite aware, whether the King lived or
died, that he must be employed in high command.
TTie Between the time in which the impeachments
•petition. Were resolved on, and the abortive trial took place,
occurred the presentation of the Kentish petition
and the episode of the Legion letter. The grand jury
of Kent having met at Maidstone, as we learn from
the comments on the action of the House of Com-
mons, was pervaded by the Kentish feeling that Louis
of France had resolved on the invasion of England,
and that Kent would be the first victim^. It was a
common saying, we are told, among the country
folk of Kent ; ' We have sown the corn, and the
French are coming to reap it.'
The five persons who had signed the petition, all
gentlemen of estate and magistrates, determined
^ See among a host of pamphlets, Jura Populi Anglicani, or
the Subject's Eight of Petitioning.
III.] The Second Bank Act. 125
that their petition should, be presented. They 1701.
applied to Sir Thomas Hales, the senior Knight for **"
the county. He hesitated and asked for a sight of
the petition. They were willing to show it him, but
begged him to keep it secret, till it was presented.
He promised, so we are told, to reserve it for his own
inspection only, carried it into the House, and showed
it freely. It roused those who saw it to fury, and
Hales came back to the petitioners, advised them to
withdraw it before it was too late, and flatly refused
to present it. They then sent for the other county
member, Mr. Meredith, who was induced to present
it, though he did so without committing himself to
its prayer or to its contents. It was read at the
table, and the petitioners were summoned to the bar ^.
They were examined as to their signatures, and
their responsibility for the contents of the petition by
Harley the Speaker, in language, if we can trust
some narratives, which recalled to memory the brow-
beating of Jefferies, and then were ordered to with-
draw.
The presentation of the petition was followed by
a, debate of five hours, in which Seymour and Howe
were the most conspicuous and violent speakers.
Alluding no doubt to the name of Colepepper (and
two persons of this family were among the five),
Seymour said that the petition smelt of forty-one.
^ At this time a member might move that the petition he
presented be read, and make a motion on it. It is only within
living memory that this part of the procedure of the House of
Commons has been altered.
126 First Nine Years of the Bank of England, [ill.
1701. Jack Howe outdid himself in the violence and inso-
lence of his talk. It appears that the Speaker took
part in the fray, as did also Shower and Hammond.
Both the other Harleys spoke against the petition,
as did the Foleys, St. John, Winnington of Bewdley,
Barnardiston, Kandyl of Guilford and Hampden of
Wendover, some of these being men who had hitherto
been reckoned as Whigs.
The House of Commons ruled that the petition
was scandalous, insolent and seditious, tending to
destroy the constitution of Parliaments, and to subvert
the established government of these realms. It is
noteworthy that in the next Parliament, the com-
plexion of which was very different from that of its
predecessor, the vote was re-aflfirmed. It seems that
the electors of Kent were not entirely sympathetic
with the petitioners, for in the next Parliament
Six Thomas Hales was re-elected, and Mr. Meredith
lost his seat. The words in the petition which seem
to have caused this tempest in the House were a
request that the Commons ' would turn their loyal
addresses into Bills of Supply.'
The ■pun- The uulucky petitioners were sent to the Gate-
ishment of ......
thePeti- house, and subjected to great indignities, the
Serjeant-at-Arms, if we can trust their narrative,
having grossly and coarsely insulted them, and levied
black mail on them. They certainly commenced a
prosecution against him, after their release, which of
course occurred on June 23, when the House was
prorogued. When they came out of prison, they
were entertained in Fishmongers' Hall {some say
Ill-] The Second Bank Act. 127
the Mercers'), and were received iu Kent with enthu- 1701.
siasm^ The Commons memorialised the King to "
strike their names out of the Commission of the
Peace, and the King, who for all the loyal addresses
presented to him was really at the lowest ebb of his
popularity in England, agreed to the humiliation of
proscribing those who had defended his policy and
justified his fears.
If the House was angry with the Kentish petition, The Legion
they were infuriated by the Legion letter. On May 1 5
this celebrated letter came by post to the Speaker,
being addressed to him at the House of Commons.
It criticises severely the conduct of Parliament, and
particularises the Speaker and Howe as the most
factious, insolent, and disloyal of the whole party.
It accuses the majority of leaving the country de-
fenceless in a crisis of its fortunes, of having pre-
tended to quarrel with the concessions which the
treaties had made to France, while they were permit-
ting Louis to take more than was conceded to him ; it
twitted them with breaking treaties which honour
and interest equally urged them to maintain, and
with repudiating allies to whom the country owed
much in the past, and whose independence and
strength was the best guarantee to England of her own
stability. It urges the expulsion of Howe, whom it
calls 'the impudent scandal of Parliaments,' de-
nounces the new authority which the House had
usurped over other than its own members, and in
^ The narrative is to be found in Parliamentary History,
vol. V, Appendix XVII.
128 First Nine Years of the Bank of England, [iir.
1701. particular the persecution of the Kentish petitioners
for an act which was in itself legal and constitutional,
and the unfairness with which it had used its power of
deciding on election petitions against those who were
opposed to the policy of the dominant party. It threat-
ened the House with something more than criticism
unless it mended its ways and attended to the busi-
ness for which it was elected, assured Harley and his
party that Englishmen would no more bear the tyranny
of Parliaments than they had borne the tyranny of
kings, and was signed ' Legion, for we are many.'
It was in vain that the pamphleteers on the Tory
side pointed out how happily the writer of the libel
and his associates had identified themselves with the
devils in the herd of swine, and the chiefs of the
party offered a reward for the discovery of the
author. The Legion letter was printed and circu-
lated widely, and undoubtedly had an influence
wherever political literature could be studied and
be effective. It was supposed to be the work of
Defoe, but its authorship has not been distinctly
traced to any one. During the year 1701 anonymous
pamphlets are accordingly numerous, though even
the largest collections cannot be supposed to contain
all the fugitive pieces of the year.
Tie Ms- The credit of William with the foreign powers and
which wii- his authority among his own people were at the lowest
'""* ' ebb during the first six months of the year 1 701 . The
House of Commons insulted him with loyal addresses
and tricked him with promises which he knew to be
insincere, pretended to examine and scrutinise the
III.] The Second Bank Act. 129
accounts of his administration, without either making 1701.
an adequate provision for even an armed neutrality or "
for consolidating the public debt, and resolved on
prosecuting William's most attached friends and
most faithful servants. Nothing but the fact that
the King's influence with his Parliament was almost
gone, can explain the bitterness with which his late
ministers were assailed and impeached. Portland
and Sommers had resigned their appointments, the
latter under circumstances which show how great
had been the pressure put on the King the year
before. Halifax, whose schemes had restored credit
when it seemed almost destroyed, who had founded
the Bank, restored the currency, invented a new
and successful instrument of finance ; who had by
creating the new East India Company procured a
welcome supply, and had stinted the means, as was
thought, by which the old Company had so long
practised corruption, was out of office, and could
hardly be employed again ; while Orford, the victor
of La Hogue and the instrument by which the naval
power of France was effectually broken and English
commerce was relieved from swarms of privateers,
was in retirement. I cannot but believe that the sole
motive which the Commons had in the prosecution of
the four lords was a desire to humiliate the King,
and that they abandoned the impeachment, under
the pretence of a quarrel with the Lords, either
becaiise they had effected that purpose, or because
they saw signs of a reaction ^
' I draw these inferences, as before, from contemporary pamphlets.
K
130 First Nine Years of the Bank of England, [in.
1701. It was not long before the reaction came. Louis
TUac- acknowledged the son of James as King of England
mraio/ fie after the death of the old King on September i"6^
re en er. j ^^^^ ^^^ repeat the reasons which should have dis-
suaded him from the act, or discuss the manner in
which the news was received in England, or the anger
which it excited, or the immediate rupture of diplo-
matic relations with France, or the recall of Man-
chester and the dismissal of Poussin, or the discomfiture
of the Tories and Jacobites and the elation of the
Whigs, or the entire conversion of Marlborough to
loyalty, and the enormous strength which the event
gave to William's position. The story is told with
picturesque fidelity by Macaulay. It is true that
William was too much broken by disease to profit
by the new situation. The House of 1701 had done
its work only too weU. The King survived his father-
in-law and uncle for less than six months.
Tiedisso- The dissolutiou (Nov. II, 1 701) was not so much
lution and . o , i -trri • i ^
elections of ioilawea Dj the Victory ot the Whigs, as by the re-
cognition of their principles^. Some of the leading
Tories and malcontents disappear for a time, as Howe,
Hammond, and Davenant^. Cambridge University for
once sent its most honoured son to Parhament, in the
^ I cannot but think that the conduct of the House of Commons
induced Louis to think that he could put this affront on William
with impunity.
^ This is, I suppose, proved by the election of Harley as Speaker
over Littleton — 216 to 212.
' Davenant threatened an action against one of the Masters in
Chancery for calling him in various ways a traitor. Luttrell,
December 4, i^oi.
III.] The Second Bank Act, 131
person of Isaac Newton. The City of London again I70l.
sent four Whigs, and by large majorities. Again some "*"
of the Tories were forced from boroughs where there
was an electorate, to take refuge in boroughs where
there was only the pretence of an electorate. Thus
Seymour had to go from Exeter to Taunton. Howe
was probably over-confident and failed to secure a
retreat, for Luttrell tells us that he would have been
returned for Newton in Lancashire, only that the two
seats were filled by the Leighs before the news of his
defeat became known ^. The reverse which the worst
men in the Tory party suffered must have given a
keen pleasure to William. But of course the pro-
prietary boroughs only represented the persons who
owned them, and it would seem from the divisions
that, except under the compulsion of a call of the
House, many members never or rarely came to St.
Stephen's.
Having touched in this manner on domestic politics,
only because this particular period, from June 1700
to September 1701, has hardly been handled by any
modern writer, I now turn to the main object before
me, the effect which events domestic and foreign had
on the fortunes of the Bank of England, and on the
price of its stock in 1701. They are exceedingly
marked, and suggestive of how foreign occurrences
as well as home politics affected this security. And
here I may observe that, in contemporaneous accounts,
one does not find any record of what we should call
' The fiction of the Chiltern Hundreds was not yet invented.
K 2
132 First Nine Years of the Bank of England, [ill.
1701. the price of the funds, but only the price of stocks
in pubHc institutions of credit and trade.
Frice of The prico of Bank stock in Houghton's register is
stock. entirely unchanged from January 3, 1 701, to April 1 1,
when it suddenly fell nineteen and a-half per cent.
The figures in Luttrell, however, do not at all agree
with this record, and I do not see how to reconcile
the discrepancy, for the difierence seems too great,
even in a speculative time like that, for one to
conclude that Luttrell's prices are time bargains at
Garra way's or Jonathan's, while Houghton's are notes
of bona fide purchases and sales. But I should men-
tion that pamphlets bearing on time bargains and
on the mischief of these transactions are common
during this period and are very outspoken, and as is
well known Sir Samuel Barnardiston had given effect
to this dislike and distrust of stock-jobbers by an Act
of Parliament^ making their bargains void.
Now, according to Luttrell, the price of Bank stock
on January 4, 1 70 1 , was 122; on January 23,119, owing
he says 'to the discourse of war'; on January 28 at
117; on January 30 at 113,' owing to the news that
the French had taken Newport and Ostend' ; on Feb-
ruary I at 106; on February 8 at no; on March 4
at 103; on March 6 at 97; on March 15 at 104; on
March 20 at 108; on April 17 and April 29 at no;
on July 5 at 1 1 1 ; on August 12 at 1 1 1 ; on August
19 at 112; on August 23 at 113; on September 4 at
117; on October 23 at 108; and on November 18 at
109. These are aU the prices noted by him in the
' 8 & 9 "William III, cap. 32.
in.] The Second Bank Act. 133
year 1 70 1 . It is clear that Luttrell's informant derived 1701.
his information from other sources than Houghton did, ^
who represents the Bank stock as wholly unaffected
by the events of the first three months of 1 701. The
discrepancy of the later period is comparatively
unimportant. I can give no explanation of the
difference, except that mentioned above, that Luttrell
has a time bargain price, Houghton a genuine pur-
chase price. And here I will bring forward the
facts which bear on the crisis.
Among the pamphlets of the year 1701 is one
(the copy I have consulted is the second edition)
entitled, ' The villainy of Stock-jobbers detected, and
the causes of the late run upon the Bank and Bankers
discovered and considered.' From internal evidence it
is plain that the pamphlet was written in February.
'As soon,' says the author, 'as the election oiAmnon
Parliament men in the City^ was over, or so far over
as that it plainly appeared on which side it inclined,
^ The election (the polling lasted four days) was over on
January 23, 1701, Ashurst, Heathcote, Clayton, and "Withers being
returned against Duncombe, Fleet, Child, and Pritchard. Heath-
cote was subsequently expelled, as holding office under the Crown,
and Fleet returned in his room. There was a scrutiny, and the
lists of the liverymen in the fifty-six Companies then existing
were printed. The copy which exists in the Bodleian Library
has evidently been used for the scrutiny. The number of livery-
men in the fifty-six registers is 7547. The largest Company is
that of the Merchant Taylors, the next the Haberdashers, then the
Goldsmiths. In the scrutiny 437 votes were found to be bad, for
various reasons. The largest quota of the bad votes was Buncombe's,
who polled all the sick and dead men. Sir Thomas Abney was
Lord Mayor, and issued the precept for the return of the livery
lists. The copy which I have consulted has been corrected from
the poll books.
1 34 First Nine Years of the Bank of England, [ill.
1701. a certain party prepared to bring about this very
design, which we now see is broke out upon us.'
My author then says that the directors of the old
East India Company, whose intrigues and jobs, he
avers, had made the stock of their own Company
fluctuate between 300 and 37, collected cash as far as
possible in order to bring about a scarcity of it, and
it is alleged by some that they have a million in
hand. Then he adds, others (he names Duncombe
as one of the conspirators) collected Bank bills.
' Now it is impossible to imagine that two or three
men should lay by Bank notes to the tune of
£300,000 which had no running interest upon them,
and have no design in it.' By these devices, he says,
they pushed down the price of stock, and made a run
on the Bank. ' But the Bank returned them in kind,
and pushed at their capital banker, and run him
down presently.' This I conclude is illustrated by a
fact narrated by Luttrell under date of February 4.
' This morning Mr. Shepherd, a noted banker of Lom-
bard Street, having great sums of money drawn from
him, occasioned by the fall of the public stocks, was
forced to stop payment at present.' They next
attacked Exchequer bills, and presented £50,000 of
them at once. This probably explains an order of
the House of Commons of February 25, under which
old Exchequer bills were cancelled and new ones
ordered to issue. But this fact also helps to give
the date of the pamphlet, for the writer continues,
' they will probably be defeated, this new corporation
of Hell, the Stock Jobbers.'
III.] The Second Bank Act. 135
But the Bank had another expedient. On Feb- 1701.
ruary 6 it gave notice that it would allow six per "
cent, on those who took its 'sealed bills' of £100
(and upwards) and held them till Michaelmas, and
would allow threepence a day for deposits of cash on
demand. The expedient was successful, for the next
day, according to Luttrell, these bills were taken to
the amount of £50,000. That the Bank effectually
demolished the project of Duncombe and his asso-
ciates is proved by the fact that no more is heard
of it.
This expedient is criticised by the otherwise kindly CnOdm
pamphleteer, and the criticism is so sound and BanVs
weighty, that it may well be quoted. ' The Bank of
England is to be blamed for allowing interest on
their sealed notes. It is a begging of credit.' 'It
should have stood boldly and not have increased their
interest to double.' And then he illustrates the wise
policy of brag by an account of what the practice of
merchants was, who take the money of a scrivener's
client at a high rate of interest, and finding they
cannot at a crisis employ it advantageously, may by
offering to repay it at once, obtain a renewal on more
favourable terms.
' The Bank is apt to confound the credit of their
stock,' he says, ' with the credit of their cash.' The
former is decidedly unassailable. We all know that
every shilling of the Bank's issues is covered by con-
vertible securities, or by saleable goods, to say nothing
of what the Bank may have in reserve. But no
institution of credit can safely neglect to fortify its
136 First Nine Years of the Bank of England, [iii.
1701. reserve of cash. You may get cash, and that speedily,
by a sacrifice, as the Bank has done. But the very
operation, though it does not damage your intrinsic
credit, proclaims your weakness. You may not injure
your schemes by what you have done, but you suggest
that you have not that foresight which men of business
should possess, and should prove that they possess to
the mercantile world. With such precautions, this
intelligent writer concludes, ' The Bank will outlive
the designs of all the Sir C — 's and Sir L — 's^ in
England.'
VoUof On April 10 the House of Commons voted, 'That
A/dtH 10,
1701. the restraining of the Bank of England from borrow-
ing money at interest, upon any security that is not
under their corporation seal, will be a great en-
couragement to trade, and a support to the public
credit.' This is evidently a hostile resolution, and
one intended to cripple the business in which the
Bank was profitably engaged. It would, for example,
prevent the Bank from accepting tallies on the
Exchequer and similarly deferred payments by the
public treasury, and making these securities the
basis of an issue of notes, not bearing interest, to the
depositor, or in the language of the time, lender,
such notes being payable on demand. No action was
taken on this resolution, in which we may probably
see the hand of Buncombe. But in point of fact, the
alUance of the Tory landowners and the Lombard
^ Sir C. is of course Duncombe ; I do not know who Sir L. is.
He is not a liveryman of the City, for I do not find any Sir L.
in a list of all the liverymen in all the fifty-six Companies in 1701.
in.] The Second Bank Act. 137
Street stock-jobber and scrivener was only temporary, I70l.
and was always hollow ^.
It has been the peculiar fortune of the Bank oi The good
England, that all the conspiracies against its credit iAe Sa»A.
have not only been foiled, but have raised the repu-
tation which the conspirators intended to undermine.
This has been the characteristic of its later history,
and it can be shown to have been equally the fact in
its earlier years, when it had to learn experience, and
was exposed to the attacks of watchful and rancorous
foes, whose personal antipathies were stimulated by
party malevolence. And as this is the fact, we cannot
but conclude that, though the management of the
Bank was occasionally mistaken, its general course of
action must have been marked with such integrity,
that it roused and maintained towards itself an
affectionate and loyal attachment which continued,
through long and trying times, unbroken and un-
shaken. That the early directors of the Bank of
England wished to make money was natural. That
they made it is notorious. That they incurred the
enmity of rivals is certain. But they never forfeited
their reputation. This reputation was constantly
made the plea for hard bargains on the part of the
Treasury when the renewal of the Bank charter was
imminent. That they overvalued the advantage of
their charter is true enough, but the defence of their
charter Hes in the fact that, in a country where all
kinds of banking are not regulated by law, a monopoly
^ See, for example, a Tory pamphlet of 1701, ' The Freeholder's
Plea against Stock-jobbing Elections of Parliament Men.'
138 First Nine Years of the Bank of England, [iir.
1701. under Parliamentary checks is better than free trade
in instruments of credit, which has often been justly
characterised as free trade in swindling.
It is probable that the hostile resolution of April
10 had something to do with the fall of igjper cent,
which Houghton records under April 1 1 . But there
were other causes at work. The war of the Spanish
Succession commenced in Italy, the prize being the
possession of Milan. On April 3, little more than
rumours, but these rumours adverse to the French
King's prospects, reached England. But the news
also came of the late King's first apoplectic seizure,
and its serious character. Bank stock remained low
till the end of June, when it rose 6\ per cent.
Within a week or ten days it fell again, new rumours
of an impending and serious war gaining consistency.
On September 1 2 it rose to the highest point in the
last nine months of 1701. In October it was de-
pressed again, owing to the vigorously hostile attitude
of William, after Louis XIV had recognised the
banished family, and war with France became certain,
for the step towards an alliance against France was
taken on September 18.
:Returnof WilKam landed in England on November 4, and
was instantly met by loyal addresses and entreaties
to dissolve Parhament. He hesitated, because time
was pressing. But the old Parliament was so factious
and untrustworthy, that he resolved on a dissolution,
and proclaimed it on November 11. In this policy,
if we can rely on the language of the addresses,
William was entirely in accordance with public
III.] The Second Bank Act. 139
opinion. It was noticed in the publications of the 1701.
time that addresses praying the Crown to dissolve ^
Parliament had been rare. Now the counties and
the large towns were almost unanimous in their
prayer that he would rid himself of the factious,
unruly, captious, insolent, disloyal and, as was cur-
rently thought, corrupt gang who had the ascendancy
in the last session, in which some of the leading
spirits, who had been detected in close intercourse
with the French envoy, Poussin, and thereafter nick-
named Poussineers, were held up to the execration
of the freeholders, as knaves iii the pay of France
and traitors to their country.
The reaction in public opinion came too late iox tu •poUU'
immediate action. The anxieties and affronts which uon.
William had suffered during the earlier part of the
past year, his consciousness that the action of his
Parliament had made the kingdom powerless in the
councils of Europe, and had left the King of France
an opportunity to so far strengthen himself as to
practically occupy the Spanish Netherlands and to
obtain the recognition of his grandson as King of
Spain from every European court except Germany,
had made William at fifty years of age an aged and
broken man. So violent had been the action of the
House of Commons, that it was behoved on the Con-
tinent that a counter-revolution was imminent. But
there was nothing which gave Louis such satisfaction
as the news of William's declining health. He be-
lieved that the Grand Alliance, which had been
successfully revived in the autumn of 1 701, depended
140 First Nine Years of the Bank of England, [in.
1701. for its very existence on William's health and life.
He imagined that Anne, the heir to the throne, would
abandon William's policy. But in June 1701, the
King, who had become conscious that his physical
powers were unequal to the fatigues of active military
operations, stifled his just resentments, and appointed
Marlborough, whose great capacity for war was known
to few, but fully recognised by William, as commander-
in-chief of all the English forces, and ambassador to
the States General. It is very likely that Louis did
not know how unbounded was the influence which
the Churchills exercised over Anne. It was as com-
plete, but was not so mischievous, as that which
Madame de Maintenon wielded over him^-
William knew that his days were numbered. He
had even consulted the French King's physician, under
a feigned name, about his symptoms, and had received
an unfavourable answer. When Fagon knew who his
correspondent was, it was not for long a secret from
Louis. Now William was well aware of the com-
munications which Marlborough had kept up with
St. Germains during the early years of the Kevolution.
He did not indeed know all, as for instance the
betrayal of Talmash's purpose in the expedition to
Brest. But though he could not trust Marlborough,
he knew that he could trust Marlborough's ambition
and greed, and, what was more, that he could rely on
Marlborough's abilities. Whether it were wise or
unwise (and WiUiam conceived it to be entirely wise
^ See for the situation from the French point of view, Sismondi,
Histoire des Franfais, vol. 1 5. chap, xxxviii.
III.] The Second Bank Act. 141
and supremely necessary) that England should again 1701.
incur the losses of a war in order to curb the ambition "
and chastise the bad faith of Louis, it was perfectly
certain to him that Marlborough could be relied on to
support a policy which would prove him to be the
greatest general, would constitute him the most
powerful statesman, and would rapidly make him
the richest subject in Europe.
Parliament met on December 30, and the King 1702.
addressed them next day, pointing out to them that ptw^"'
war was inevitable. The House assured him on^^"*.""**
January 2 that they would defend his title against p*^?'''-
the son of James, and all his open and secret abettors
and adherents, as well as all his other enemies, that
they would enable him to show his just resentment at
the affront put upon him by the recognition of his
rival ; assured him of their determination to maintain
the Protestant succession, and declared that they would
make good the alliances that he had made or might
make for the curtailment of the exorbitant power
of France and for preserving the hberties of Europe.
They then proceeded to bring in bills to attaint the
exUed prince and his mother, Mary of Modena. The
King received the address very graciously.
But though the Commons were far more willing to
carry out the King's policy than their predecessors
were, and voted taxes and troops readily enough, they
inherited and exercised the same violent temper
towards those who offended them which their pre-
decessors had exhibited. One of the Kentish peti-
tioners, Thomas Colepepper, had at the general
142 First Nine Years of the Bank of England, [iii.
1702. election been a candidate for Maidstone. He was
■unsuccessful, and, most rashly, petitioned the House
for the seat. The Committee however reported by
a great majority that the sitting member was duly
elected, as they would have reported that a corrupt
Poussineer was, as against a Kentish petitioner, and
that Colepepper had been guilty of bribery and
indirect practices by endeavouring to get himself
elected. The politics of Captain Bliss, the member
whom they seated, are made clear by the fact,
that two days after the decision of the Committee,
this personage, an obscure imitator of Jack Howe,
gave security at the King's Bench upon an informa-
tion brought against him for words reflecting on the
King.
The decision of the Committee was endorsed by the
House on February 7 by the following resolutions: —
(i) That Captain BKss is duly elected for Maidstone,
and that Thomas Colepepper, Esq., who was one of
the instruments for promoting and presenting the
scandalous, insolent, and seditious petition, commonly
called the Kentish petition, to the last House of
Commons, hath been guilty of corrupt, scandalous
and indirect practices, in order to procure himself to
be elected a burgess for Maidstone. (2) That the
aspersing of the last House of Commons, or any
member thereof, with receiving French money, or
being in the interest of France, was a scandalous,
villainous and groundless reflection, tending to sedi-
tion, and to create a misunderstanding between the
King and his people, (3) That Mr. Colepepper is
III.] The Second Bank A cL 143
guilty thereof, and is to be committed to Newgate, 1702.
and to be prosecuted by the Attorney-G-eneral. "*""
Ten days later, they sat in a Committee of Privi-
leges, and resolved : ( i ) That to assert that the House
of Commons is not the only representative of the
Commons of England, tends to the subversion of the
rights and privileges of the House of Commons and
the fundamental constitution of the government of
this kingdom. (2) That to assert that the House of
Commons have no power of commitment but of their
own members, tends to the subversion of the consti-
tution of the House of Commons. (3) That to print
and pubhsh any books or libels reflecting on the pro-
ceedings of the House of Commons or on any member
thereof, for or relating to his service therein, is a high
violation of the rights and privileges of the House of
Commons. Colepepper absconded from the custody of
the Serjeant-at-Arms, and a reward was offered for his
apprehension. He petitioned the next Parliament that
proceedings against him might be dropped, and died
in August 1703. The Commons were more reasonable
on February 26, in reference to the impeachments of
the last session, and affirmed that it was the undoubted
right of the subject to petition the King for the dis-
solution and the sitting of Parliaments. The accident
which proved fatal to the King had occurred on the
twenty-first. Macaulay says that it happened at
Hampton Court. Luttrell however states that the
King was hunting near Kingston-on-Thames. He
died on Sunday, March 8.
The report of the physicians and surgeons who
1 44 First Nine Years of the Bank of England, [in.
1702. made an examination of the King's body proves that
The King's ^^^ accident hastened, but did not cause his death.
itfot«^ They stated indeed that the fracture had akeady
united, but that the body "Was greatly emaciated, and
that the cause of death was inflammation of the
lungs ^. Shortly before his death he said, that 'when
he was in his grave, the people of England could have
no reason to say that he aimed at anything but their
good.' He had certainly proved that England, which
after the days of Oliver and before William's accession
had been of no account in the councils of Europe,
was now a first-rate power. But the vindication of
William's memory was not to come for some time.
On December 15, when the Queen had sent a message,
which was to be sure rather premature, requesting
the Commons to make a settlement of £5,000 a year on
Marlborough for his services in the campaign in
Flanders^, though they had affirmed that he had re-
trieved the honour of the English nation, and refused
to use the words ' maintained' or ' advanced,' yet on
December 15 they declined to accede to the Queen's
request that they would make permanent and
attach to his peerage (he had been made a duke)
the sum just mentioned, which she had granted
to him for her life out of the post office, on the
ground that the 'revenue of the Crown had been
so much reduced by exorbitant grants in the late
reign.' When it was proposed to omit the last
' The report of these physicians and surgeons is to be found
in the Bodley pamphlets.
^ Parliament (a new one) met on October 20.
III.] The Second Bank Act. 145
four words, the Commons carried their insertion by 1702.
200 to 89. ^
If we assume that the war which ended with the iu wars
Peace of Eyswick was absolutely necessary for the France.
settlement of the Eevolution, and that the acceptance
of the throne of Spain by Louis on behalf of his
grandson was so serious a menace to the peace of
Europe that England was bound to resist it by arms,
it is impossible to over-estimate the diplomatic
abilities of William, whether we consider the diffi-
culties of his position in England, or the power
against which he had to contend. The only strength
he had was what he could obtain from the resources
and continue by the taxation of the English and the
Dutch, for he could not get the aid of a single German
state, except by a Dutch or English subsidy. From
the beginning of his reign the Dutch accused him of
sacrificing their interests to those of England, and the
English reproacJbied him with lavishing English money
on Dutch objects and the revenues of the Crown on
Dutch favourites. The Council of Amsterdam tried
to thwart him^, as much as the Seymours and the
Howes in Parliament, and the -Jacobites and Non-
jurors out of it intrigued against him ; and WiUiam,
though by the theory of the Dutch constitution his
pow;ers were far more limited than those of a British
king, was able to take sharper measures against
Dutch malcontents than he could against Enghsh
opposition and Parliamentary rancour.
At the time of the English revolution, France was
' See for example Davies' History of Holland, vol. iii. p. 218.
L
146 First Nine Years of the Bank of England, [iii.
1702. the richest and most densely peopled kingdom in
France at Europe. It probablj contained fifteen millions of
teitoM a»rf inhabitants, possibly twenty millions ^ Its manu-
^poiicyy^ factures had been developed by Colbert with the
greatest care, at the expense no doubt of agriculture,
but up to the highest efficiency. It had appropriated
the silk industry, once the glory of Genoa and Italy.
It had succeeded in acclimatising those other textile
fabrics, notably the lighter woollen textures, for which
Flanders had once been famous. It had for a century
carried out the tyrant's policy of the Greek philo-
sopher in the other European states, of making them
poor, disunited, hopeless. It assisted in the ruin of
the Low Countries, and in 1672 had almost succeeded
in destroying Holland. It had prolonged, for inter-
ested reasons, the horrible Thirty Years' War, which
arrested the progress of the German race for more
than two centuries. It wasted what remained to
Spain in the wars which it waged with Philip IV
and Charles II. It insulted and humiliated the Pope.
The kings of England were bribed into complicity
with its designs. In 1679 the glory of Louis XIV
and the supremacy of France were at their height.
Its domes- The Frcuch King had succeeded, as no French king
had succeeded before him, in subduing his nobles.
All the difficulties of his predecessors had arisen from
insurrections of the French nobility, and hardly a
reign was free from them. Even Louis, in his youth,
had a taste of their turbulence. But he had entirely
^ The resources of France are fairly calculated in Davenant's
essay on Public Debts and Engagements, 1698.
HI.] The Second Bank Act. 147
vanquished them, and they were now as docile as the 1702.
French peasantry were. The French King had at "
last become absolute. So had the Spanish King, but
he had destroyed all that makes a nation in the pro-
cess. So had the German Emperor in his hereditary
dominions. But the beggary of Austria was nearly
as complete as the beggary of Spain. Italy had
become a shadow, a geographical expression, a
political fiction. But France was rich, powerful,
united under an able and ambitious monarch, who
wished that his people should be as prosperous as
was consistent with his purposes and principles of
government. Louis had an army which was trained
under his own eye. He selected his generals with
rare judgment, and up to this period of his long reign
had been rarely deceived in his choice. Those whom
he chose, served him with unshaken fidelity and with
complete self-abnegation. The French army was the
one school of mihtary science, just as the Dutch army
under Maurice of Orange had been more than half a
century before. Louis, in the prime of his career, was
as vigilant and careful in details as he was farseeing
and unscrupulous in his plans. He had the best
cavalry, the best infantry officers, the best parks of
artillery, the most scientifically constructed fortresses,
the most complete commissariat. And aU this ma-
chinery of war was so nicely adjusted, that it could
be set in motion at once, and as the King willed.
Its discipline, from the Marshal of France to the
private, was so perfect, its obedience so unhesitating,
its confidence so high, that the King could reckon on
L 2
enemies.
148 Fir si Nine Years of the Bank of England. [lir.
1702. it to the uttermost. After the disasters of Blenheim
and Eamillies, the French consoled themselves that
their conqueror learned the art of war under their
great commander, Turenne^.
Holland The Only possible enemies whom this great
England monarch dreaded were England and Holland. Every
his onl/y
/ormidffiiZe motive of self-prescrvation and self-interest should
have united the English and the Dutch in a firm
and unbroken alliance. Unhappily the rivalries of
trade, in a world wide enough for both, made them
frequently hostUe to, and always suspicious of each
other. Unhappily the habit of buccaneering, which
had become almost a virtue during the long Spanish
wars, had made the trade of a pirate more profitable
than that of a merchant, and only a little less re-
putable. Some people said that Paterson, the founder
of the Bank of England, had been a missionary,
some said he had been a pirate, and many people
thought that he might have been both in turns.
Years after the time of which I am writing, an
English archbis;hop is said to have been a buccaneer
in his youth. . The statement may have been false,
it may have been a calumny, but it would not have
been made had it not seemed a possibility. At last,
and not too soon, civilised governments began to
take steps against these practices, and Kidd in 1701
was hanged for those offences against the law of
nations which secured the honour of knighthood
and heroism for Drake little more than a century
before. The mutual jealousy of England and Holland
^ See Sismondi.
III.] The Second Bank Act. 149
was a serious hindrance to their united poHtical 1702.
action. Both took commercial monopoly for commer- *^
cial wisdom.
Unhappily too for this necessary concert, faction
was dominant in both countries. In the great
city of Amsterdam, at that time the commercial
centre of the world, the burghers were unfriendly to
the Prince of Orange. He had been persistently
commended to them by the English Court, and
though William's affection and devotion to his
country had been incontestably proved, there were
memories still green of the perfidy of his uncle,
who had forced him upon them, and of the murdered
De Witts, by whose care he had been educated, by
whose slaughter he had profited. The outrage was
worse than the tragedy of Barneveldt, who had also
shielded and brought up that Orange prince who
afterwards effected his judicial murder. But by the
force and integrity of his character, aided perhaps,
as William himself said, by the gentleness and grace
of his wife, he had won the Dutch as no prince since
Father William had won them.
In England the case was different. He had gained WiiUams
his throne by the misfortunes of a near kinsman,'
who had done him no personal wrong. His position
was worse than that of Henry the Fourth, for the
first Lancastrian King had been exiled and plundered
by his cousin, and might have been justified for
avenging a feud. William had to be sure saved the
nation from what was abhorrent to them, from
what' they saw no means of saving themselves ; but
1 50 First Nine Years of the Bank of England, [ill.
1702. nations, like individuals^ are rarely grateful to those
who have put them under overwhelming obligations.
He foresaw from the very first what would be his
lifelong experience, when he commented on the
plaudits with which the public welcomed the com-
mencement of his reign. ' It is, Hosanna, to-day,'
he said, ' it may be, Crucify him, to-morrow.' And,
in fact, during his whole reign he was exposed to
mahgnant slander, to the plots of assassins, to the
conspiracies of men whom he was obliged to trust,
and to the rancour of a free parliament, in which
Churchill alternately caressed both parties and de-
ceived both. Now William did not embroil his
people with France in order to keep his throne,
though it was a maxim in those days that English-
men are most manageable and most steady when
they are at war, for he was constantly on the point of
resigning his uneasy, his almost intolerable dignity.
It is easy for us, in our own day, when we have
had experience of, and can study how an ever-
grasping ambition defeats its own ends, to criticise
the action of our forefathers, when they joined the
Grand Alliance of 1689, and renewed it in 1701.
There were men at the time who saw that Louis
had taken upon himself a task beyond his strength,
great as it was, when he strove to secure the whole
Spanish succession to his grandson after the death of
Charles II. But to the mass of men Louis was
in Europe at the beginning of the eighteenth
century what the Turk was in the middle of the
fifteenth, what Charles V was after the battle of
III.] The Second Bank Act. 151
Pavia, what Napoleon was after the day of Jena. 1702.
He owed his greatness to the folly of a divided ^
and disunited Europe, and the people as usual had
to pay for the faults of their rulers.
With the exception of a few literary hacks, from General
Davenant to Mrs. Manley, few Englishmen y7 ere, from cor-
I believe, bribed by French pistoles. But it was ''"^ *""'
notorious that leading and ennobled Englishmen had
been bribed wholesale, less than a generation ago,
from Charles on his throne to ChiflSnch at the back-
stairs. Greedy as Marlborough was, greedy as
Eussell was, covetous as Leeds was, I do not beheve
that after the Revolution they handled French gold,
though the first of them trafficked for a pardon by
the promise of perfidy, and gulled his dupe, the
exiled king, after one shameful act, by perfidy
which was even more shameful. But there were
two classes who were entirely stainless. The mass
of the country party was unquestionably honourable.
It was stupid, prejudiced, hating Willia,m and the
Dutch only less than it hated Louis and the French,
and daily justifying its distrust of James by its
indignation at the miscreants about his court, and
by its conviction, which they reiterated, that a sup-
posititious child had been palmed on the King^.
The other class were the Whig merchants of London
and the other great cities, who founded the Bank,
^ People far more trustworthy than Fuller (who got some of
his deserts in 1702) helieved in the story of the warming-pan.
After the death of James, many of the nonjuring clergy conformed.
They did not therefore believe in the legitimacy of Mary of
Modena's son.
152 First Nine Years of the Bank of England, [ili.
1702. watcliecl over its credit by the best of their lights,
** and with it over the credit of the State. The debt
which the Eoman poet says the State owed to the
house of Claudius Nero at Metaurus may be paral-
leled by the debt which the English constitution,
and indeed human liberty and progress, owes to the
merchants who sat in the "parlour of the Mercers'
Chapel or the Grocers' Hall during those eventful
years.
Tie Oeca- The Lords, who had a deeper stake in the Eevolu-
f^mity^ tion than the Commons, whom the Triennial Act, and
* ■ the frequent elections, even under that Act, had greatly
strengthened, were not disposed to yield to the
country party in their passionate determination to
pass the Occasional Conformity Bill. ' There was no
reason,' the Lords argued, 'why the Dissenters should
be harassed. The State has resolved to give pre-
eminence to one ritual and one hierarchy. We
cannot indeed endure the chaos of the Common-
wealth again. But this provided against, if a man
obeys the law and satisfies the conditions which
qualify him for public office, who should be curious
as to the residue of his devotions 1 Even Eochester
and Nottingham, though of these orthodox persons
the former is often drunk and the other is always
dismal, do not want to curtail the Toleration Act or
revive the Clarendon Code. In this crisis of our
affairs it is not wise to afiront our best friends, the
capitalist Dissenters, who find the funds for this
just and necessary war.' It is noteworthy that the
abortive Act against Occasional Conformity was passed
III.] The Second Bank Act. 153
when Englishmen had got weary of the war, when 1702.
its ends were obtained by the manifest exhaustion of "^^
France, and when another dynastic difficulty had
arisen, the union of the claims of Austria and Spain
in the person of Philip's rival, and when a party was
greedily anxious to retain the gains of office.
I must here give a brief account of those political Bank
events which affected the fortunes of the Bank in 1702.
1702. It is remarkable that Luttrell, so interested
in the career of this institution, or, as I think,
in the time bargains or wagers laid on its future value,
gives only one price during the year. This is on
June 9, 1702, when he states that its price was 122.
This may well be, as the stock was plainly rising.
One fact in the history of the Bank is now clear.
It was resting at last on a solid foundation of credit,
and had become a regular instrument of Govern-
ment, as well as a centre of trade. The result is
patent ; the process by which it gained in so short
a time so unassailable a position as to be not
only commercially trustworthy but to be the finan-
cial fortress of England during the long and costly
war which she was about to undertake, is not and
cannot be discoverable. For of all the difficulties
which the analyst of economical problems encounters,
none is greater than that of interpreting the process
by which honest men correct their errors of judg-
ment and strengthen their position by avoiding
for the future what they discover to have been
a mistake or a danger in the past. On the other
hand, it is comparatively easy to find how knaves
in 1702.
154 Firsi Nine Years of the Bank of England, [ill.
1702. and fools are disappointed of their aims. Their
cipher can be successfixlly interpreted. We may not
be able to tell how it was that the Bank of England
escaped the perils of their Great Experiment ; but
we can easily discover why Chamberlain, Law, and
the projectors of the South Sea Scheme brought
shame or ruin on their dupes.
Emnours The pricc of Bank stock rose, with some slight
fluctuations, from January to March, by about seven
and a-quarter per cent., though at this time war was
imminent, and the Grand Alliance on one hand and
Louis on the other were engaged in making pre-
parations for the ensuing conflict. On December 26,
1 701, it stood at iio|, on March 13, 1702, at ii7f.
There are no prices for the next two weeks. On
April 3 it is at 113J. I conclude that this fall
was due to the King's death, and the natural un-
certainty which prevailed as to what Anne's policy,
or rather that of Lady Marlborough, would be.
It would not seem that a resolution of the House
of Commons in Committee of Ways and Means on
February 14th, 'that a duty of one per cent, should
be levied on all shares in the capital of any Corpora-
tion or Company which shall be bought, sold,
bargained, or contracted for,' had any depressing
influence on the stock, or that the declaration of
a six months' dividend on March 26 of 4f per cent.,
along with the rumour that Philip, the new King of
Spain, had been poisoned at Barcelona^, had the
efiect of arresting the faU. It is possible also that
^ Luttrell says that the Jews started this rumour.
III.] The Second Bank Act. 155
there may have been a doubt whether the States 1702.
General would confirm the appointment of Marl-
borough, made by the late King, for it was rumoured
in London on March 1 7 that they had resolved to
make the Landgrave of Hesse their commander-in-
chief. There also came news in the same month
of an outbreak in Ireland. Another rumour early
in April was that the Dutch had chosen the Queen's
husband as commander-in-chief, a story which would
certainly, had there been any truth in it or had any
one believed it, have had a very adverse effect on
the public stocks.
War was declared against France simultaneously Renewal
on May 15 by Great Britain, the United Provinces, w<w.
and the Emperor of Germany, and on May 20th
Marlborough sailed for HoUand, and put an end
to all doubts by the fact that the Dutch republic
forthwith made him their commander-in-chief Par-
liament was prorogued on May 26, and dissolved
on July 4. On September 11 the stock rose to
125^, probably in consequence of news coming that
the English fleet under Eooke had been doing great
things on the Spanish coast, especially at Cadiz,
and was on the look-out for the Spanish treasure
fleet. In the same month the public was informed
of Marlborough's successes in Flanders, and of the
number of strong places which he had captured.
On October 3 the Bank declared a dividend of 7^
per cent. ' out of principal and interest,' but the
stock had more than lost the rise of September 11,
probably because the public were now informed that
156 First Nine Years of the Bank of England. [lir.
1702. the attack on Cadiz had been unsuccessful. On
October 20 the new Parliament met, and re-elected
Harley. The price of Bank stock remained steady
up to the latter end of November, when it rose
five per cent. The bullion taken at Vigo^ was just
about this time brought to the Mint, and the news
had arrived that the King of Portugal had joined
the Grand Alliance. The general satisfaction felt
at the position of foreign affairs is reflected in the
price of Bank stock for the rest of the year, for it
was at i28f on the last quotation in December,
a rise of i \\ from the beginning of the year.
Thesuccess The successes of the allies, small when compared
Allies. with what they were to be a short time after the
conclusion of the period to which I have restricted
myself, were mainly due to that which many persons
had foreseen in William's days, that the resources of
France, great as they were, and the power of Louis,
despotic as it was, and thoroughly as it was obeyed,
were unequal to the task of defending the enormous
and impoverished dominions of the King of Spain.
Every one of his generals, Boufflers, Vaudemont,
Catinat, Villars, complained of the inadequacy of the
forces which were placed at their disposal and at the
total absence of assistance from the provinces over
which Spain claimed an indisputable sovereignty.
By the end of the year Louis was left with no ally
but the Elector of Bavaria, for the King of Portugal
^ The news of the destruction of the fleet at Vigo came to
London on October 31, 1702. People already began to say, that
•what the fleet captured, the Queen was giving to Marlborough.
III.] The Second Bank AcL i^y
had deserted him, and the Duke of Savoy had con- 1702:
eluded a secret treaty with the Emperor. "
In the new Parliament, which met on October 20 r^e new
and sat till February 27, the Tories had a majority, ment.
The City reversed its decision of the previous year,
when Clayton, Ashurst, Abney, and Heathcote were
returned by great majorities. Only one of these
was returned in July 1702. Vernon and Colt dis-
appear from Westminster, and are succeeded by
Clarges and Cross, the latter of whom had stood in
the previous November. Howe recovered his seat
for Gloucestershire, though not without a contest
and a petition, and Newton no longer represented
Cambridge University, though that learned body did
not entrust its suffrages to Hammond again. But
Parliament did not flinch from the pledges of its
predecessor, or hesitate to vote large supplies for the
war.
The chief object of this Parliament seems to have
been to pass an Act against Occasional Conformity, to
which reference has already been made. The
measure was practically rejected by the Lords^, and
the proceedings in Parliament were rendered more
interesting by the energy with which the Lords
resented an attempt to carry bills by tacking them
on to money bills, and by the wrath of the Commons
' The Lords took the novel step of printing this bill, the
amendments, the reasons for the amendments, the reasons of the
Commons, and the report of the free conference, in order it
seems to enlighten the public. This resolution called forth a
protest from Nottingham and the extreme Tories, February 24,
1703.
158 First Nine Years of the Bank of England, [ill.
1702. with the famous work of Defoe, A Short Way with
Dissenters, a pamphlet the irony of which the Tories
did not at first discern. They fell again on WiUiam's
old servants, expelled Lord Eanelagh, who had been
for many years Paymaster of the Forces, and attempted
to revive the prosecution of Halifax by alleging mal-
feasance against him in connexion. with his oflBce of
Auditor of the Exchequer. It was in vain, for the
Lords voted that Halifax had satisfied all the require-
ments of the statute under which the duties of his
office were defined.
Bank On January i, 1703, Bank stock stood at 129; on
stock
in 1703. September 17 it was at I38f. There were only two
occasions on which it suffered a fall. One was in
the third week of January, the other in the second
week in April. On the former occasion it fell three,
on the other three and three-quarters. The origin
of the former fall appears to be the news of the ill
success of Admiral Benbow's encounter with the
French squadron in the West Indies, a result which
was ascribed to the cowardice and disobedience of
four captains in his fleet. The latter fall seems to
be due to the alarm felt at the time about the French
privateers from Dunkirk, which were protected there
by the French admiral, Ponty. At the same time
certain reinforcements were being sent to Holland,
about the safe arrival of which London was anxious^.
The pro- In point of fact, the success of the war, however
QT'BSS OT
trade. great were the military abilities of Marlborough,
depended on the success of trade. The two maritime
^ Luttrell under dates of April 13 and April 15.
III.] The Second Bank Act. 159
powers levied the taxes and raised the loans with 1703.
which to support their own armies and fleets, and *^~
the subsidies by which their allies in Germany,
in Italy, and in Portugal were enabled to put their
forces on the field. So keenly alive were the Dutch
to the absolute necessity of commerce, that it was a
tradition of theirs from the days of the War of In-
dependence, to trade even with that country which
was seeking to subdue them. When Drake attacked
Cadiz, though he no doubt inflicted severe injuries
on Philip, he ruined many a Dutch merchant who,
with the complete approval of the States General,
was trading with the public enemy. Hence the
Commons, at the beginning of the year, addressed
the Queen, praying her not to assist the Dutch with
paid English troops tUl they prohibited all trade and
correspondence with France and Spain, by stopping
all posts, letters, bills, &c., with those countries^.
The Dutch agreed to this, though sorely against
their will, by prohibiting all traflSc for a year. I
suspect that they did not very vigorously enforce
their prohibition. It is doubtful indeed, if they had
been ever so sincere, whether they would have been
successful in their efibrts, for at the very time when
the English executive and Parliament were pressing
these conditions on the Dutch, they were prosecuting
London merchants for exporting English wool to
France, and importing French silks into England.
The fact is great progress had been made in trade.
1 Luttrell, January 5. See on this Davies' History of Holland,
iii. 270.
i6o First Nine Years of the Bank of England. [lir.
1703. The old East India Company's stock, whicli ranged
Price of from 41 to 59 in 1699, from 58^ to 135! in 1 700, from
iZian 119 to 71 in 1 701, from 78! to 117! in 1702, had
gone steadily up to 1 34 in September 1 703. The rise in
the new Company was as marked. Its lowest price
in 1699 was 46f, its highest 109. In the following
year, it gradually rose from 126 to 143!, at which
it stood on December 20, having been at 153^
in June. In 1701 it was less prosperous. Its lowest
price was 100 ; its highest, towards the end of the
year, 120. In 1702 it fell to ii6\, in July, the
lowest price; and was at 161, the highest, at the
end of December. In 1703, it started at 159^ in
January, and without a single reverse reached 219
in September. These figures, of course, are indi-
cative of prosperous trade i- According to Luttrell,
however, stocks were affected this year by the
revolution in Constantinople, the news of which
came on Sept. 2, to the effect that, owing to French
intrigues, the Sultan had been deposed, and his
brother substituted, and that aU the deposed prince's
ministers had been bowstrung. Such news suggested
trouble to the German Emperor on the eastern side
of his dominions.
The War It Only remains that I should deal with the
actual facts of the war in 1703. The Emperor
Leopold had contrived tol detach from Louis his
* The figures in the above statement are taken from Houghton,
who gives a weekly price of the stocks in both companies, of the
old from the beginning of his series (1691), of the new from
January 1699.
m 1703.
III.] The Second Bank Act. i6i
only two allies, and this by offering to each part of 1703.
that indivisible inheritance which Louis, to satisfy "
Spanish pride and even to maintain his grandson
on the Throne, was bound to , guarantee and protect.
He had won over Victor Amadeo of Savoy, by a
promise of Montferrat and certain parts of the
Milanais. He had conciliated Pedro of Portugal,
who was a good deal alarmed at the naval demon-
strations of the English and Dutch fleets off the
Spanish coasts, ' by the promise of parts of Es-
tremadura and Galicia, and of the province of Kio
de la Plata in South America. It was fairly well
known that the finances of France were already in
an almost desperate condition, and that expedients
for raising fresh revenue were nearly exhausted.
It was known that the French King had nothing to
expect from Spain, and that he would have to find
the means even for maintaining his grandson's
domestic expenditure in the country of his adoption.
Still Louis showed no signs of flinching. He directed
Venddme to carry on the campaign in Italy, he
sketched out a plan of operations in Lower Germany
for Villars and Tallard, and committed the troops
in the Spanish Netherlands to Villeroi and Boufflers.
But at the time at which my record closes these
armies had done nothing, and though at the latter
end of the year Villars defeated the Imperialist
generals at Hockstett, and Tallard had routed the
forces of the Prince of Hesse at Spire, this news had
not reached England. Meanwhile Marlborough had
captured Bonn, and other places in Flanders.
M
1 62 First Nine Years of the Bank of England, [in.
1703. By this time, however, the Bank of England had
Theposi- become the financial agent of the British Govern-
bZ^*^" ttient, and public credit was firmly established.
During its long history it has occasionally been
imperilled by panic, as in 1708, 171 1, 1714, and
1745. Once it nearly fell into the trap of that
gigantic speculation, known as the South Sea
scheme, and was only wise in time. Once it was con-
strained by the incessant drains which Pitt made on it
to submit to a suspension of cash payments, though for
several years after that step was taken, its notes,
owing to the prudence with which the Bank restrained
its issues, through inconvertible paper, were at par.
Thechange At last, I =50 vcars after the time in which it was
of 1844. . . ''
instituted, Peel, under the advice of some men, eminent
for their financial reputation, and against the
opinion of others who were quite as eminent, turned
the Bank of England from what it was originally,
a bank of issue, the amount of whose notes was left
to the sagacity and experience of the Directors, into
a bank of deposit, whose issues were henceforward
to be regulated automatically. On this change, as
is well known, the discussion and criticism is well
nigh a library in itself. But I will not even enter on
the tempting question as to whether the Legislature
was justified in extinguishing the goodwill of the
Bank, by which I mean the reputation which it had
accumulated by unstained probity, unwearied dili-
gence, unvaried public spirit, and traditional acute-
ness during a century and a-half. This reputation
of the Bank in 1 844 was as much its property as its
III.] The Second Bank Act. 163
rest and its profits were. Now the Bank Act took 1703.
away from the Directors the power of circulating the "
Bank's credit. Nor do I attempt to discuss here the
far larger question, whether the Act of 1844 was
wise. After all, the policy of the Bank had been
the policy of the nation, for the Bank management
was one of those forces in Commerce which act on
that which it was intended from the beginning to
work with in a real partnership and from which it
gained, by long experience of mutual benefit, a
healthy reaction. This partnership was tested by re-
ciprocal advantages, and was justified by marvellous,
by unprecedented progress. It is something to have so
exceptional a history of successful harmony between
competing interests, and to recognise what honest
Michael Godfrey said, that 'in this business one
cannot do good to oneself, without doing good to
others.' I will assume that the Act of 1844 was
just and wise, or allow that the change was then,
perhaps, inevitable and imperative. Least of all
can I discuss, whether, after an interval of forty-
three }ears, the old situation could be renewed. It
is possible to destroy, by an instantaneous act, that
which cannot be restored. A change in commerce,
like a change in society and in politics, may be
irrevocable.
But two things have clearly ensued from the
change. One, and the most obvious, is that the
constitution of the Bank of England was funda-
mentally altered by the Act of 1844. The other
is (whether the change was necessary or whether
M 2
164 First Nine Years of the Bank of England.
1703. it was unwise), that the well- won and deserved place
of the Bank of England in the financial counsels
of Europe is totally changed from what it was,
when its fiats on the rate of discount were watched
for with impatient interest, in all the monetary-
centres of the world, as eagerly indeed as the
watchers in Argos looked out for the beacon fires
of the Egean,
TABLE II.
BATES OP EXCHANGE OW AMSTERDAM.
Pae 01" Exchange, s^^V-
Those entries only are given in whicli a change occurs ; e.g. from
February i, 1693, to March i, the rate is 32-6.
1695.
Jan. 18 32.7
Feb. I 32-6
Mar. I 32-4
Mar. 15 3I-IO
Mar. 22 3I-I
Apr. 5 31-3
Apr. 12 .. 31-2
Apr. 19 31-4
Apr. 26 31-2
May 2 31-6
May 17 31-2-3
May 24 30-10
May 31 30
June 7 29-1
June 14 29-4
June 21 29-2-3
June 28 29-2
July 5 29-3
July 12 29-2
July 19 29
July 26 28-5
Aug. 2 27-5
Aug. 9 27-2
Aug. 16 27
Aug. 23 27-4
Sept. 6 28-1
Sept. 13 28-3
Sept. 20 28-7
Oct. 4 29
Oct. II 28-4
Oct. 25 28
Nov. I 27-8
Nov. 8 27-6
Nov. 15 27-5
Nov. 22 27-8
Nov. 29 28-4
Dec. 6 28-3
Dec. 13 29
Dec. 20 30-10
1696.
Jan. 3 29
Jan. 10 30
Jan. 24 31
Feb. 7 30
Feb. 14 29-6
Feb. 21 29-10
Feb. 28 29-9
Mar. 20 29-3
Mar. 27 29-8
Apr. 3 30-10
Apr. 10 29-8
Apr. 25 30-3
May 2 30-1
May 15 30-6
June 12 30-4
June 19 30-2
1 66 Rates of Exchange on Amsterdam.
July 3 3°
July 17 29-3
July 24 29-2
July 31 387
Aug. 7 33-32
Aug. 21 28-10
Sept. II 35-2
Oct. 2 36-5
Oct. 9 36-8
Oct. 23 3i'8
Oct. 30 31-6
Nov. 6 37.4
Nov. 13 37
Nov. 20 37.9
Nov. 27 37-7
Dec. 4 378
Monet. Bank.
Dec. 25 .. .. 37-8 31-9
1697.
Jan. I .. .. 37-8
Jan. 8 .. .. 37-2 31.2
Jan. 15 .... 36 30.4
Jan. 29 .. .. 36.2 30-4
Feb. 5 .. .. 36-7 29-8
Feb. 19 .. .. 362 29-1
Feb. 26 .. .. 36-3 29
Mar. 5 .. .. 36.5 29-2
Mar. 12 .. .. 36.8 29-1
Mar. 19 .. .. 36-6 29
Apr. 2 .. .. 36.5 29-2
Apr. 9 .. .. 36.5 28-6
Apr. 16 .. .. 36-5 29
Apr. 23 .. .. 36.5 29-3
May 14 .. .. 36-3 29-2
May 28 .. .. 35-8 29.10
June 4 .. .. 35-8 30
June II .. .. 35-7 29-11
June 25 .. .. 35-11 31-1
July 2 .. .. 35-10 30
July 9 .. .. 35-7 30
July 16 35-2
July 23 35.7
Aug. 6 35.9
Aug. 27 35.10
Sept. 3 35.9
Sept. 17 35-8
Sept. 24 35.7
Oct. I 35.6
Oet- 8 35.4
Oct. 15 35-5
Oct. 22 35.7
NoT^- 5 35-8
Nov- 12 35-9
Nov. 19 35-10
Dec. 3 35.9
Deo. 10 35.7
Dec. 24 35.10
Dec. 31 35.9
1698.
Jau- 5 35-9
Mar. 18 35-10
Apr. 8 35.9
■Apr. 29 35.8
May 6 35.6
May 13 35.4
May 20 35.3
May 27 35.5
June 3 35.7
June 10 35.6
June 17 35.5
June 24 35.4
July 15 35-3
July 22 35.5
July 29 35.4
Aug. 19 35-3
Sept. 16 35-5
Sept. 23 35-7
Oct. 7 35-4
Rates of Exchange on Amsterdam. 167
Nov. 18 35.5
Nov. 25 35.6
I^ec. 9 35.5
1699.
Jan. 6 35-5
Jan. 20 35.3
Jan. 27 35.2
I'eb. 10 35.3
Feb. 17 35.4
I'eb. 24 35.5
Mar. 2 35-4
Mar. 30 35-3
May 19 35.2
May 26 35-3
June 9 3S-2
June 30 35-1
July 14 35-3
July 21 35-6
Aug. II 35-5
Aug. 25 35-6
Oct. 20 35-5
Dec. I 35-6
Dec. 15 35-8
Dec. 29 35-9
1700.
Jan. 5 35-8
Jan. 26 35'7
Feb. 9 35-5
Mar. I 35-7
Mar. 15 35-8
May 3 35-7
May 17 35.8
June 7 35.7
June 21 35'6
July 19 3S-7
Sept. 5 35-6
Sept. 30 35-5
Oct. 4 35-7
Oct. II 35.8
Oct. 18 35.7
Oct. 25 35.6
I^ec. 13 35.8
1701.
Jan.
Feb.
Feb.
Mar.
Mar.
Mar.
Mar.
Apr.
Apr.
Apr.
May
May
May
June
July
July
July
July
Aug.
Aug.
Aug.
Aug.
Sept.
Sept.
Sept.
Sept.
Oct.
Oct.
Oct.
Oct.
Dec.
Dec.
24
14
21
7
14
35-7
36-6
36.10
37-2
36.6
21 369-10
28 37
II 37-6
18 36'2
25 35-IO
2 3511
9 361
16 363-4
13 364
4 36-2
11 36-2-1
18 36-4-3
25 36-4-5
I 36-5
8 36-6
22 36-5
29 36-5-4
5 366
12 36-11-37
19 36-10
26 36-8-7
3 366
10 36-6-7
17 36-7
24 36-7-6
12 36-7-8
19 36-7
1 68 Rates of Exchange on Amsterdam.
1702,
Jan.
Jan.
Jan.
Feb.
Feb.
Mar.
Mar.
Mar.
Mar.
Apr.
Apr.
Apr.
May
May-
May
May
June
June
Aug.
Aug.
Sept.
Sept.
Sept.
Oct.
Oct.
Oct.
Oct.
i6
23
30
6
13
5
13
20
27
3
10
I
8
15
29
5
19
7
14
II
18
25
2
9
16
31
6
36'
36
36'
36
35'
35-
35'
35-
35-
35-
35'
35'
35'
35-
35-
35-
35-
35-
35-
35-
35-
35-
35'
35'
35
35
35'
34
■II
• 10
■9
•8
•7
.7-8
•8
•lO-II
■ 10
8
8-9
8
7
5
1-2
2
1-2
2-3
3
3-4
1-3
II
10
Nov. 21 34-9
Dec. 4 34'io
Dec. 18 34-10-9
Dec. 25 34'9-8
1703.
Jan. I 349
Jan. 15 34-5
Jan. 22 34-6
Jan- 29 34'4-5
I'eb. 5 34.5
Feb. 12 34-5-6
Feb. 19 34-7
Feb. 26 34-6
Mar. 5 34.6-5
Mar. 12 34-5
Mar. 19 34-5-4
Mar. 26 34-1
Apr. 9 34-2-3
Apr. 23 34-3-4
Apr. 30 34-4
May 24 34-3
June II 34-3-4
June 25 34-4-3
July 2 34-2-5
July 9 34-2-3
July 16 34.3
July 23 34-3-2
July 30 34-2
TABLE III.
DISCOUNT OR PREMIUM ON BILLS OP EXCHANGE,
LONDON AND AMSTERDAM,
From 'A General Treatise on the Reduction of the Exchanges,
Moneys, and Real Species of most places in Europe.' Alexander
Justice. 1707.
The use of this table is as follows. On July 3, 1696, the rate
of exchange between London and Amsterdam was 30, i.e. it took
(see under 30 below) £123 los. in London to honour a draft on
Amsterdam from London for £100. On April 11, 1 701, the rate
was 37'6; ia this case a draft on Amsterdam from London could
be met by £98 i6s.
28.
• ••32-3
31. II
. ..16
34-
29.
• ••27-7
32.
■ "IS-?
34-1
30-
■ ■•23-5
32.1
• .. 15-4
34-2
30.1
. ..23-2
32.2
. .. I5-I
34-3
30.2
. ..22-8
32.3
. .. i4'8
34-4
30-3
. ..22-5
32-4
. ..14-5
34-5
304
. .. 22-2
32.S
. .. 14-2
34-6
30-5
. ..21-8
32.6
• ••i3'9
34-7
30.6
. ..21-5
32.7
• ••13-7
34.8
30-7
. .. 21-2
32.8
• ••13-4
34-9
30.8
. .. 20-8
329
. ..131
34.10
30-9
• ..20.5
32.10
. ..12-8
34-ir
30.10
. .. 20-2
32.11
. ..12-5
35-
30.11
. ..19-8
33-
. .. 12-2
35-1
31-
- -ig-s
33-1
. ..II-9
35-2
311
. .. 19-2
33-2
. .. II-6
35-3
31.2
. .. i8-9
33-3
. ..II-4
35-4
3I-3
. ..i8-6
33-4
. .. Ill
35-5
31-4
. ..l8-2
33-5
. .. IO-8
35-6
31-5
• ••i7'9
33-6
. ..10-5
35-7
316
. .. 17-6
33-7
■ •• 10-3
35-8
31-7
. ■•I7-3
33.8
. .. 10
35-9
31-8
. ..17
339
■ •• 9-7
36'io
319
. ..16.7
33-IO
• •• 9-4
35-II
31.10
. ..i6-3
33-11
. .. 9'2
36.
.. .. 8
9-
36.1 .. .
. 2.7
.. .. 8
6
36.2 .. .
• 2-4
.. .. 8
4
36.3 •• •
. 2-2
.. .. 8
I
36.4 .. .
. 2
.. .. 7
9
36.5 .. .
■ 1-7
.. .. 7
6
36.6 .. .
• 1-5
.. .. 7
3
36.7 .. .
• 1-3
.. .. 7
36.8 .. .
. I
.. .. 6
9
36-9 .. .
. -8
.. .. 6
6
36.10 .. .
. -6
.. .. 6
3
36.11 .. .
• -3
.. .. 6
I
37- •• •
• I
.. .. 5
8
37^- ■• •
.Par
.. .. 6
6
37.1 .. .
•I
.. .. 5
3
37.2 .. .
• -3
.. .. 5
I
37-3 •• •
. -6
.. .. 4
8
37-4 •• ■
. -8
.. .. 4
6
37-5 •• •
. I
.. .. 4
3
37.6 .. .
. I'2
.. .. 4
I
37-7 •■ •
• 1-5
.. ■• 3
9
37.8 .. .
• 1-7
.. .. 3
6
37-9 •• •
• 1-9
.. .. 3
4
37.10 .. .
. 21
.. .. 3
I
37.11 .. .
• 2-4
.. .. 2
9
38. .. .
. 2-6
TABLE IV.
DISCOUNT or BANK BILLS.
From Houghton.
1696.
Dec. 16 16J
1697.
Jan. I 16J
Jan. 8 17
Jan. 15 i6|-
Jan. 22 16
Jan. 29 17
Feb. 5 16
Feb. 12 i8|
Feb. 19 21
Feb. 26 21
Mar. 5 22
Mar. 12 —
Mar. 19 —
Mar. 26 21
Apr. 2 21
Apr. 9 19
Apr. r6 21
Apr. 23 21
Apr. 30 21
May 7 21
May 14 21
May 21 21
May 28 21
June 4 —
June II —
June 18 —
June 25 —
July 2 15
July 9 i4i-i4
July 16 13
July 23 II
July 30 io/9|-
Aug. 6 7/.
Aug. 13 7/.
Aug. 20 7/.
Aug. 27 5
Sept. 3 2i
Sept. 10 2^
Sept. 17 o
Sept. 24
Oct.
I
Oct.
8
Oct.
15
Oct.
22
Oct.
29
Nov.
5
Nov.
12
Nov.
19
Nov.
26
Dec.
3
Dec.
10
Dec.
17
Dec.
24
Ceases o
TABLE V.
CHANGES IN THE VALUE OP GOLD, SILVER,
AND GUINEAS.
1693.
Dec. 22 ..
1694.
Jan. 5 .
Jan. 12 .,
Jan. 19 .,
Jan. 26 .
Feb. 2 .
Feb. 23 .
Mar. 2 ..
Mar. 23 .
Mar. 30 .
July 20 .
July 27 .
Aug. 3.
Aug. 31 .
Sept. 14 .
Sept. 28 .
Oct. 6 ,
Nov. 23 .
Dec. 7 .
Dec. 21 .
1695.
Jan. 1 1 .
Jan. 18 .
Jan. 25 .
Feb. I ■
Feb. 15.
Gold,
oz.
81/
Silv.
oz.
5/3
Gs.
21/10
5/3*
21/11
80/
5/2*
22/10
80/6
5/3
21/10
80/10
5/2
80/6
5/3
6/2i
21/11
22/
81/
5/3
5/2
5/2i
5/3
81/6
5/4
81/
5/4i
5/4
5/4*
5/5
22/3
81/6
5/4
22/6
82/6
83/
86/
5/4
5/4*
5/5
22/9
22/10
23/
23/4
Feb. 22 ..
Mar. 8 ..
Mar. 15 ..
Mar. 29 ..
Apr. 12 ..
May 10 ..
May 17 ..
May 24 ..
June 7 ..
June 14 ..
June 21 .,
June 28 ..
July 5-
July 12 .
July 19.
Aug. 2 .
Aug. 30 .
Sept. 13 .
Sept. 20 .
Sept. 27 .
Oct. II.
Oct. 18.
Oct. 25 .
Nov. 8.
Nov. 15 .
Nov. 22 .
Nov. 29 .
Dec. 13 .
Gold,
oz.
88/
90/
■ 91/
, 92/
95/
98/
•103/
.106/
.109/
.107/
. 107/6
. 108/6
108/
106/6
.. 108/
Silv.
oz.
5/6
6/8
5/7
5/6
5/3
4/2
5/6
5/9
5/10
6/
6/1
6/2
6/4
6/5
6/2
Gs.
26/
26/6
28/4
29/
29/8
3°/
29/6
29/7
29/9
29/10
29/9
29/8
29/6
29/4
29/3
6/3 29/4
29/5
29/7
29/9
29/6
6/4
6/6
172
Changes in the Value of Gold, etc.
Gold.
Silv.
1696.
oz.
oz.
Jan. 10..
..
5/"
Apr. 17 ..
..
July 10 ..
.. 82/
S/2
1697.
Jan. 29 ..
.. 80/
5/
Gs.
22/
22/
Gold.
Foreign
1698.
oz.
silver oz
Aug. 26 ..
81/2
5/3
Sept. 2 ..
5/2
Sept. 9 ..
.. 81/4
Sept. 23 ..
.. 81/
5/3
Sept. 30..
81/2
5/2
Oct. 21 ..
81/4
Nov. 25 ..
81/6
1699.
Feb. 24 ..
'uncertain.'
Mar. 2 ..
.. 79/8
Mar. 16 ..
79/6
There are no quotations of either of the three for nearly the first quarter of 1696.
INDEX.
A.
Abney, Sir Tbomas, one of tlie first
directors, 3.
elected Lord Mayor, 95.
Acts of Parliament, 5 William
and Mary, cap. 20, I.
12 Will. Ill, cap. 12, 6.
Addresses, to dissolve Parliament
in 1701, 139.
Advertisements, Chamberlain's,
53 sqq-
Aldermen, London, contingent
gains of, 97.
Ambassador, the Spanish, his con-
duct and William's action,
97-
Amsterdam, factions in, 149.
Bank of, origin of, 7 ; its
loan to Bank of England,
29.
exchange of English bills at,
38.
exchange with London ex-
plained, 37.
loan from, in 1696, 65.
Anjou, Duke of (PhUip V), made
King of Spain, 102.
Antwerp, projected branch of
Bank of England at, 27.
Archbishop, an English, said for-
merly to have been a buc-
caneer, 148.
Armies, could be maintained by
England and Holland alone
against Louis, 122.
Army, French, its reputation,
147-
Assessments, to property or in-
come taxes, 107.
B.
Bank, a national, how its funds
should be protected, 74.
Bank Act of 1844, its character,
162.
the second, 89.
Bank Bills, discount of, in 1696-7,
first printing of, 25.
forgery of, made felony, 90.
interest on, in 1694, 22.
Bank of England, business of,
described by Godfrey, 20.
bye-laws of, 4.
constitution of, changed in
1844, 163.
criticism on, by an unfriendly
writer, 69.
deceived by promises of Govern-
ment, 65.
early enemies of, 9.
enemies of, 24.
essentially aWhig institution, 1 9.
excluded from the scheme of
the Land Bank, 58 ; from
Ways and Means scheme in
1696, 52.
first Act creating it, i.
first payments of, to Govern-
ment, 3.
friendly criticism on, in 1697,73.
Governor and Directors of,
summoned to House of
Commons, 8 1 ; their balance
sheet, 82.
how the first Act was carried
in the Lords, 12.
its action in June, 1696, 64;
in May, 16,96, 63.
174
Index.
Bank of England (continued).
its career for a century and a
half, 162.
its early way of doing business,
. 17- .
its expedients in 1701, 134-5.
its good fortune and its repu-
tation, 137.
its interest in getting the ex-
changes favourable. 39.
its position in 1702 assured,
153;
its resistance to the schemes of
the House of Commons in
1696-7, 85.
its sacrifices on behalf of the
Government stated, 79.
its stock affected by foreign
occurrences, 131.
loan to, by Bank of Amster-
dam, 29.
privileges necessary for, in
1696-7, 75.
purchased little bullion at first,
34-
purposes of the founders of, 22.
rapid solvency of, if Govern-
ment tallies were paid, 83.
sufferer by the Land Bank, 62.
' Bank of England, A Short Ac-
count of the,' published in
1695, 19.
Bank Stock, price for first eleven
weeks, 25 ; in 1699, charac-
ter of price of, 93 ; in 1 703,
158; in 1701, 132 ; in 1702,
154-
proposal to increase greatly,
deprecated, 78.
rates of, in the early part of
1700, 98.
rise of, in December, 1695, and
January, 1696, 30 ; in 1698
(May 6), explained, 92.
Banker, private, character of his
issues, 73.
Bankers, private, views of, on the
Bank of England, 10.
Banking, English, character of,
6.
Banks, continental, principal, 7.
Bamardiston, Sir S., his Stock-
jobbers' Act, 132.
Barneveldt, judicial murder of,
149.
Base money, of Henry and Ed-
ward, still in circulation, 31.
Benbow, Admiral, his failure,
158.
Bill, goldsmith's, origin of, 6.
Bills, Exchequer, form of, 67.
Bliss, Captain, elected for Maid-
stone, his political bias, 142.
Bolles, Sir John, chairman of
committee on Bank of Eng-
land, 82.
Borrowers, the Bank a benefit to,
24- .
Boufilers, with Villeroi in the
Netherlands, 161.
Brest, expedition against, 13.
Bribes, French, few persons pro-
bably took them, 151.
Briscoe, John, an associate of
Chamberlain, 50.
on the moneyed men, 1 7.
Britannia, on the Bank seal, 3.
Buccaneering, long a profession,
148.
Bullion, 'sworn off,' 33 note.
C.
Cambridge, University of, returns
Newton, 130.
Carmarthen (Duke of Leeds), his
action on the Bank Act,
12.
Cash, amount of, in Bank of Eng-
land, December 10, 1696, 83.
Cash payments, resumption of,
proposal to degrade currency
at the, 47.
Chamberlain, his project and
antecedents, 50.
note of, in 1699, 56.
Index.
175
Charles I and the deposits in the
Mint, 5.
Charles of Austria, expected to
succeed the King of Spain,
lOI.
Charter of Bank of England, its
first duration, 3.
its defence, 137.
Churchills, the, their influence
over Anne, 140.
Circulation, paper, ignorance of
what its extent might be,
72.
City, magnates of, lived in Lon-
don, 15.
City of London, bribery by, 28.
election of, in January, 1701,
particulars of, 133 note.
Civic honours, desired in London,
96.
Clement XI, his election as pope,
103.
Clippers and coiners, hangings of.
Clipping, prevalence of crime of.
Clipping and Coining Act (6 & 7
Will. Ill, cap. 1 7), provisions
of, 32.
Clipping of coin and the gold-
smiths, 21.
Coin, state of, and its relation to
goldsmiths, 21.
Coins, foreign, circulation of, 30.
Colbert, his success with French
manufactures, 146.
Colepepper, Thomas, treatment of,
by the House of Commons,
141.
Colepeppers, the, comments on,
by Seymour, 125.
Companies, joint stock, numerous
in 1694, 5.
Competition, in banking, effects
of, in early times, 76.
Constantinople, revolution at,
160.
Continental banks, character of, 8.
Conzales, Marquis, the Spanish
Ambassador, sent out of Eng-
land, 97.
Council, Common, of City, their
commissions on loans, 13.
Craggs, bribed and expelled, 28.
Credit, must be based on specie,
Credit of stock, compared with
credit of cash, 135.
Cromwell, a scare in 1694, 11
note.
Currency, a forced, cannot be
entertained, 22.
condition of, in 1694, 13.
English, its state in 1695-6,30.
in 1696-7, described by a con-
temporary, 75.
paper, basis of, 61.
proposal to degrade the, 45.
rules for a paper, 23.
subsidiary, principles of, not
known, 15.
Customs, large in 1700 and 1701,
99.
unfruitful, and why, 106.
D.
Danish Government, risks of a
collision between it and the
Swedish, 100.
Darien, expedition to, its effects
on European diplomacy, 100.
unpopularity of the, 96.
Davenant, Charles, his 'modern
Whig,' 17.
on bank deposits bearing in-
terest, 18.
on Bank of Amsterdam, 8.
Defoe, his ' Short Way with Dis-
senters,' 158.
supposed to be the author of
the Legion letter, 128.
Denmark, Princess of (afterwards
Queen Anne), makes her
servants vote for Fox and
Montague, 29.
176
Index.
Deposit, banks of, principle of, 9.
Deposits, attracted by interest
in 1694, 18.
De Witts, the, murder of, 8,
149.
Discount, of Bank of England
bills in 1696, 66.
of English bills at Amsterdam,
explained, 38.
rates of, watched eagerly, 164.
Discounts, history of, in 1795-6,
40.
of bank paper, greatest in
1697, 85.
Dissolution, the, of 1700, its
effects, 113.
of 1701, its effects, 130.
Dividend, sources of, to the Bank,
18.
first, of the Bank, 26.
second, of the Bank, 29.
of August 28, 1697, 88-
Duncombe, Charles, afterwards Sir
C, a candidate for the City
of London, 103.
a reputed project of, in
October, 1700, 101.
chosen Lord Mayor, but re-
jected, 94.
his dealings with Exchequer
bills, 90.
his gains during the crisis of
1695-6, 43-
his intrigues against the Bank
of England in 1701, 134.
resistance of Aldermen to, 70.
sells out_from the Bank, 28.
tried, acquitted, made Sheriff
and knighted, 92.
Dutch, their criticism of "William's
policy, 145.
policy of, in trade, 159.
public opinion on, in 1700,
no.
Dutch East Indian Company and
Bank of Amsterdam, 8.
Dutch Government, negotiations
for cash from, 67.
E.
East India Companies, rise in
stocks of, 99.
stock of, 160.
East India Company, bribery by,
in 1695, 28.
criticised, 80.
monopoly of, 3.
stock of, fluctuations of, 14, 86.
the old, credited with a run on
the bank in 1701, 134.
Election of June, 1699, unfavour-
able to Whigs, 94.
Elections of 1702, character of,
157-
England, disarmed by the Parlia-
ment of 1700, 122.
feeling of, towards William, 149.
England and Holland, their
rivalries, 148.
English East India Company,
foundation of, 87.
stock of, fluctuations of, 14.
European Powers, preparations
of, after Philip of France
accepted the crown of Spain,
103-
Examination of William's body,
report of, 144.
Exchange, rates of, a table of, 37.
Exchanges, foreign, in 1695-6, 36.
Exchequer, deposits in, in 1672, 6.
first payment to, 25.
payments to, should pass
through the Bank, 77.
Exchequer Bills, effects of, on
Bank paper, 86.
first issue of, 66.
origin of, 57.
run on, in 1701, 134.
Excise, unpopular, and why, 105.
Exports and imports, restraint
on, generally ineffectual, 34.
P.
Fagon, consulted by William,
140.
Index.
177
Finances, state of the, in 1700,
104.
Flanders, Marlborough's successes
in, in 1702, 155.
Fleet, Sir John, his election in the
place of Gilbert, 124.
Foley, Mr. Speaker, an advocate
of the Land Bank, 50.
Footpads, near London, numbers
of, 16.
Foreign bills, rate of discount of,
by goldsmiths, 84.
should be paid through the
Bank of England, 77.
Forgery, punishment of, only on
certain forms of, 91.
Fox, Sir Stephen, candidate for
Westminster, 29.
France, finances of, in 17031 i6i-
its resources compared with
those of Spain, 116.
wealth and population of, in
1702, 145.
French privateers, damage done
by the, in the war of 1689-
1697. 75-
Fuller, Thomas, his frauds, iii.
G.
Genoa, Bank of, origin of, 7.
Gloucester, Duke of, political
effects of his death, 120.
and its effect on Bank stock,
100.
Godfrey, Michael, an adage of,
76.
at Namur, his death, 27.
Deputy Governor of the Bank,
2.
his ' Short Account of the Bank
of England,' 19.
on clipping, 31.
on purchases of bullion by
Bank, 34.
Godolphin, Lord, sells out of the
Bank, 28.
Gold, price of, in 1694-5-6, 35.
Goldsmiths, failures of, 21.
the, and the Land Bank, 70.
their disobedience to the law, 63.
the, private bankers, 6.
Government, the good faith of the,
the capital and assets of the
Bank, 18.
the position of, in 1700, 105.
Governor and Company of the
Bank of England, title of the
undertaking, i.
Governor and Directors of Bank
of England, reproached with
supineness, 79.
Guineas, price of,in 1694-5-6,35.
Guy, bribed and expelled, 28.
H.
Hales, Sir Thomas, his action on
the Kentish petition, 125.
Halifax, again attacked by the
House of Commons in 1702,
158. See, also Montague,
Charles,
superseded in 1701! 129.
Hammond, member for Cambridge,
in the pay of France, 118.
Harley, Eobert (Earl of Oxford),
an advocate of the Land
Bank, 50.
elected Speaker in Parliament
of 1700, 104.
his behaviour to the Kentish
petitioners, 125.
language used about, when
Speaker, 115.
Speaker again in 1701, 113.
Harvests, of 1694 bad, 14 note;
of 1699 and 1700 good, 98.
Heathcote, Gilbert, one of the
first directors, his previous
action, 3.
his expulsion from the House
of Commons, 124.
Holland, importance of, in a mili-
tary sense, to England, 117.
natural alarms of, in 1701, 116.
N
178
Index.
Holland [continued).
occupation of, by French, in
the Continental Wars, 8.
Hope, Mr., on Bank of Amster-
dam, 7.
Houblon, Sir James, at Namur, 2 7 .
Houblon, Sir John, first Governor,
2.
gives notice of new premises, 4.
his action on May 4, 1696, 62.
Lord Mayor in 1695, 29.
Houghton, John, his register of
bullion prices, 34.
on mysteries of stock-jobbing, 5.
House of Commons, numbers in,
at passage of Bank Act, i
note.
feeling of, in relation to war in
1700, 104.
its interpretation of privilege,
114.
its resolution on the Land
Bank, 50.
its votes on February 17, 1702,
143-
no effective discipline in, 115.
of October, 1702, its vote on
December 15, 144.
practice of, in 1700, 105.
resolution of, on February 15,
1701, how carried, 118.
their action on the Kentish
petition, 126.
their address to the Crown on
the Dutch trade, 159; to the
King about the four lords,
121.
vote of, on April 10, 1701,
136-
votes in, solicited by trading
companies, 79.
House of Lords, its tenacity about
its privileges, 114.
rejection of Bill of Pains and
Penalties (Duncombe's) by
one vote, 92.
their views about the Partition
Treaties, 121.
Howe, John, how described in
the Legion letter, 117.
rejected in Gloucestershire,
131-
Hudson's Bay, stock of, its fluc-
tuations, 14.
Huguenots, the four, who got
the highest prize in 1694, 5.
I.
Impeachment, the, of the four
lords, probable motives of,
129.
Income-tax, the, of William's
time, 106.
Independents, generally in towns,
II.
Interest, rate of. Government
cannot control, 78.
Issues, excessive, effects of, 71.
Jacobites, enemies of the Bank,
. ^9-
Joint-stock companies, rivalry of,
illustrated, 86.
Justice, Alexander, on the cur-
rency, 30.
on the discounts of 1695, 42.
K.
Kent, men of, their alarms in
1701, 117.
Kentish petition, story of the,
124-
Kidd, Captain, piracies of, re-
membered in 1700, 112.
hanged in 1701, 148.
King, Gregory, on the productive
classes, 107.
King of Spain, Charles II, death
of, 102.
Kingston-on-Thames, place where
William fell from his horse,
143-
Index.
179
Lancashire trials, discredit of,
19.
Land, loans on, by Land Bank
Act, 59.
Land and trade, interests of, 23.
Land Bank, Commissioners of,
their negotiations, 64.
defence of the, after its failure,
68.
scheme of, its intrinsic ab-
surdity, 51.
Land Bank Act, particulars of.
Landed interest, disappointment
of, in 1696, 61.
Landed men, views of, on moneyed
men, 52.
Lease of lands, Chamberlain's
view of, 51.
Leeds, Duke of, suspected of
being bribed, 28.
Legion letter, its criticism on
Parliament, 114.
its presentation, and its lan-
guage, 127.
Levinz, Serjeant (Sir Cresswell),
his revision of the Bank's
bye-laws, 4.
Loan, public, that to the Bank
the first permanent, 18.
of four millions, projected by
Duncombe in 1700, loi.
Loans, negotiated in City, 13.
Locke, John, his knowledge of the
meaning of money, 40.
his serviceable treatise on the
recoinage, 46.
Lombard, proposal to establish a,
by Bank of England, 21.
Lombard Street, a private banker
in. 74-
London, commercial world of, in
1699, 95.
City of, returns Whigs in 1701,
131-
Londoner, lived in London, and
why, 16.
Lords, House of, their reasoning
about the Conformity Bill,
152.
hostile to moneyed men ; their
action on the Bank of Eng-
land Act, 12.
Lords Justices beg a loan, 1696,
64.
Lottery loan, duration of the, 18.
Louis XTV, accepts throne of
Spain for his grandson, its
effects, 102.
attack on Holland by, in 1672,
8.
desires universal monarchy,
100.
feeling of Europe towards, 150.
his acknowledgment of the old
King's son, 130.
his attempts to conciliate the
King of Portugal and the
Duke of Savoy, 161.
his hopes in the decline of
■William's health, 139.
his policy and his success,
146.
strengthened by the English
Parliament, and his objects,
122.
Low Countries, the prize of the
War of the Spanish Succes-
sion, 122.
Lowndes, Secretary to the Trea-
sury on the recoinage, 46.
M.
Macaulay, his description of the
Recoinage Act, 48.
on Godfrey's death, 27.
on the first Bank Act, 12.
on the run on the Bank, May
4, 1696, 66.
the gap in his History, 115.
Marine, mercantile, amount of,
13-
N 2
ISO
Index.
Marlborough, appointed by Wil-
liam commander-in-chief,
140.
captures Bonn, 161.
his action during the impeach-
ment of the Lords, 123.
his treason in 1694, 13.
made commander-in-cliief of the
Dutch forces, 155.
settlement of pension on, pro-
posed by Anne in her first
year, 144.
Mayor, Lord, the contingent gains
of, 97.
Mayoralty of London, a specula-
tion, 96.
Melfovt, letter of, and criticism
on it, February 17, 1701,
119.
Mercers' chapel, first home of the
Bank, 2.
Merchants of London and civic
honours, 96.
Meredith, Mr., M.P. for Kent, his
action on the Kentish peti-
tion, 125.
Million Lottery, the, in 1694, 5.
Mint, the, and Charles I, 5.
money coined at, from Elizabeth
to the recoinage, 65 note.
Mints, country, in 1696, 68.
Money, free circulation of, hind-
rances to the, and its effects,
39-
new, issue of, irregular, 62.
Moneyed men, generally "Whigs
and dissenters, 16.
the, on the situation in 1700,
112.
views of landed men on, 52.
Montague, Charles (Lord Hali-
fax), candidate for "West-
minster, 29.
difficulties of, in recoinage,
44.
financial schemes of, log.
goes to Peers as Lord Halifax,
103.
Montague, Charles (continued).
his policy in founding the New
East India Company, 95.
his resolution on the recoinage,
42-
influence of, waning in 1699,94.
precedent of, in 1696, useful in
1819, 48.
Moor, of Westminster, made a
fortune by clipping, 32 note.
N.
Navy, grant for, in 1701, 120.
Neal, Mr., on Ways and Means in
1696, 52.
Newton, Isaac, made Master of
the Mint, 98.
returned for Cambridge Uni-
versity, 131.
Newton, Lancashire, a pocket
borough of the Leighs, 131.
Nobility, the French, subdued by
Louis XI"V, 146.
' Noland, the free state of,' a
scheme of parliamentary re-
form, 114 note.
Notary, public, and the protesting
of bills, 66.
Notes, convertibility of, not se-
cured at first by the Bank, 18.
O.
Occasional Conformity Bill, at-
tempts to carry the, 157.
Officials, percentages of, 107.
Oligarchies, the two Houses rival,
114-
Opinion, public, on the situation
in 1700, 108.
Opposition, the, recruited from
some Whigs in 1701, 113.
Orford, Lord (Edward Eussell),
had retired in 1701, 129.
Orphans' Fund, loans on, 21 and
note.
Owlers, smugglers so called, 32.
baffled the revenue officers, 106.
Index.
i8i
Pains and Penalties, Bill of Com-
mons against Duncombe, 91.
Parliament, dissolution of, in
1695, 29.
the, of 1701, its character,
113-
the cause of the aggressions of
Louis, 121.
the, of December, 1701, its
action, 141.
tries penalties before it under-
takes reforms, 32.
Parliamentary reform of Crom-
well, its character, 105 note.
Partition Treaty, the second, and
its reception in Spain, 97.
Patent offices, numerous, with
high pay and nominal duties,
107.
Paterson, William, one of the first
directors, 2 and note.
a pamphlet probably by, 22.
said to have been once a buc-
caneer, 148.
Peel, Sir E., and the Bank Act,
162.
answer to his question. What is
a pound ? 46 note.
Penalties against clipping ineffec-
tual, 34.
Percentages of officials, 107.
Petitioners, Kentish, their treat-
ment, 126.
Petitions in favour of the Bank
and the paper currency, 85.
Philip II, his claims to a universal
monarchy, 99.
Pitt, his action in 1797, 11.
his suspension of cash payments,
162.
Pledges, loans on, permitted to the
Bank, 19.
Politicians, a maxim of theirsabout
land and trade, 23.
Pope, father of, his savings, 5.
Portland, Earl of (Bentinck), his
influence with the Bank,
68.
had resigned his appointments
in 1701, 129.
Portocarrero, his influence with
Charles II, 100.
Portugal, King of, joined the
Grand Alliance, 156.
Poussineers, nickname of, 139.
Premiums on early subscription to
Bank stock, 2 and note.
Public debt, oldest part of, 6.
Q.
Quakers, generally country farm-
ers, II.
Quarrels, the, between the Houses
incessant, 113.
Queen, death of the, in 1694, 19.
E.
Eanelagh, Lord, expulsion of,
158.
Eecoinage, Act for (7 William
III. cap. i), provisions of,
43. 48.
cost of, 44.
rate of, 65.
the remedy for the adverse ex-
change, 41.
Eegency, Council of, its negoti-
ations, 65.
Eeligion of Sovereign to be that
of the people, after the Ee-
volution, 17.
Eepresentation, absurdity of, in
1701, 114.
Eevenue officers delay payments
to the Bank, 77.
Eichelieu, his policy a tradition in
France, 117.
Eomney Marsh, smugglers or
owlers of, 32.
Eooke, Admiral, rumours about,
IS5-
l82
Index.
Rumours, disquieting, in the spring
of 1701, 138.
numerous in 1702, 154.
Eyswiok, Peace of, and Bank
stock, 71.
left Louis stronger than ever,
116.
S.
Savoy, Duke of, makes a treaty
with the Emperor, 157.
Scawen, Sir W., at Namur, 27.
deputy governor after Godfrey's
death, 29.
Scotland, customs' duties of, less
than the cost of collecting
them, 106.
Scriveners, losses by, 21.
Seignorage at Mint in 1695,
31-
Seventeenth century, great dis-
coveries in the, 14.
Seymour, Sir C, his reputation,
117-
on the Kentish petition, 125.
rejected at Exeter, 131.
suspected of being bribed, 28.
Shepherd, Mr., a banker, his
failure, 134.
Sheriffs of London, when nomi-
nated liable to fine on re-
fusal, 97.
Shops in London, rent of, 15.
Shower, Sir Bartholomew, his
character, 117; his previous
career, 4.
Smith, Adam, on Bank of Am-
sterdam, 7.
Sommers, Lord, a ,story about,
raked up, 115.
had been deprived of of&ce in
1701, 129.
on the recoinage, 42.
Sovereign, religion of, after the
Revolution, 17.
Spain, King of, Charles II, his
condition, 99.
Spanish monarchy, problem of
succession to, 99.
Spanish succession, public opinion
on, in 1700, 108.
Specie, the foundation of credit,
23-
notes, amount of, 82.
Stamp on money does not add to
value of, 22.
Standard, old, carried with diffi-
culty in 1696, 47.
Stock-jobbers, not liked by the
Tory landowners, 136.
run of, on the Bank, alleged, in
1701, 133-
Stock-jobbing, passion for, 5.
Stocks, fluctuations of, illustrated,
14-
rise of, in the two East India
Companies in 1700, 99.
Subjects, religion of, to be that of
the Sovereign, 17.
Subscription of 1697, gradual re-
payment of, 93.
Sunderland, Earl of, his collusion
with Duncombe, 90.
Swedish and Danish governments,
a collision expected between,
T.
Tallard, M., campaign of and
victory in 1703, 161.
his reputed bribes, no.
Tallies, serious depreciation of,
and improvement in, 84.
Talmash, his death, and the cause,
13-
' The money paid in,' meaning of,
2<;.
Time bargains, Houghton's de-
scription of, 5.
Tindal, Matthew, on the Parlia-
ment of 1701, 119.
Tonnage Act, nickname of, 9.
Tories, views of, on Bank of Eng-
land, II.
Index.
183
Tory pamphleteers on the Legion
letter, 128.
Trade, success of, the origin of
the resources of England and
Holland, 158.
Trade and land, interest of, 24.
Trader, solvency and wealth of,
well known in 1694, i6.
Transfers, amount of at the Bank
in 1696, 83.
Treasury, the, its straits in 1696,
64.
wants of, in 1694, 13.
Trevor, Sir John, the Speaker,
bribed and expelled, 28.
Turenne, said by the French to
have been the teacher of
Marlborough, 148.
U.
Usurers, a few, enemies of the
Bank, 24.
Venice, Bank of, 7.
Vigo, bullion captured at, 156.
Villars, campaign of, in 1703, his
victory, 161.
Villeroi, campaign of, in 1703,
161.
W.
"War, declaration of, on May 15,
1702, 155.
"Watts, Dr., Sir Thomas Abney a
patron of, 3.
"Whigs, dissentient, views of, 10.
four chosen for London in 1 700,
103.
William III, broken health of,
due to the action of the
House of Commons, 139.
cause of death of, after autopsy,
144.
his acceptance of the Land
Bank inexplicable, 57.
his comments on his reception
in 1688, 150.
his judgement of Marlborough,
140.
his partition treaties, 100.
his position with foreign powers
in 1701, 122, 128.
his return to England in No-
vember 1701, 138.
his speech to Parliament on
February 11, 1701, n8.
ill-advised as to the settlement
of the finances, 113.
ill-usage of, by English Parha-
ments, 123.
obliged to strike the Kentish
petitioners out of the com-
mission of the peace, 127.
policy of, thwarted by theories
about the export of money,
40.
popular criticism of, 1 1 1 .
the accident which led to his
death, the place of, 143.
THE END.
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